Jennifer Westacott, chief executive of the Business Council of Australia, has used her Australia Day address in Melbourne to call for a serious re-think of the way policy reform is being pursued in Canberra, saying the country needs better leadership from all of its politicians.

Ms Westacott has pointed to the legacy of Gough Whitlam, and the way in which former Prime Ministers Bob Hawke, Paul Keating, and John Howard built on the fundamentals of his policy reform program, to say Australia needs similar types of leadership from its current crop of leaders.

She also says the country needs to adopt a radical "10-year plan" with clear horizons, staggered in stages, so everyone will know where we are heading.

"The death of Gough Whitlam reminded me of his capacity, both in Opposition and in government, to prepare us for a more progressive, more outward-looking society," Ms Westacott said on Monday.

"I believe people are right to say there was an Australia before and after Gough Whitlam," she said.

"I know there are political leaders across the country now who want to show this kind of leadership."

Ms Westacott says the government needs to pursue a long-term reform program that will touch everything from health policy to education and welfare policy.

It should focus on three things: the budget and fiscal arrangements, education and skills, and economic growth.

It should also include two more Productivity Commission inquiries - one on the aged pension and retirement income system, the other on the health system - saying they are needed because both systems are so expensive that the budget deficit cannot be reduced if they are not fixed.

"Make no mistake, if you cannot improve the productivity and efficiency of the health system, you cannot fix the fiscal position," Ms Westacott said.

But the Abbott government needs to work hard to renegotiate a "social contract" with voters to ensure that such change can happen, she warned.

"We need to find common ground and agree on the fundmentals, even if the detail is contested," she said.

The first year of the 10-year plan should be 2015.

"Year 1 may, and indeed should, involve very modest fiscal correction and instead lay the groundwork for future considered spending reforms," Ms Westacott said.

"We should welcome a very different set of budget papers than we have seen in the past."

Ms Westacott's speech comes at the time of the year – just four months out from the next budget – when Australia's lobby groups are beginning to ramp up their efforts to influence what goes into the budget.

But she says some policies from last year's budget need to be put to bed.

"The priority for 2015 is to finalise tertiary education reform … 2015 should not be the year of continued policy confusion about the role of TAFE," Ms Westacott said.

"It should not be the year when TAFE is allowed to wither on the vine due to lack of purposeful policy."

Ms Westacott says the Business Council's to-do list for 2015 would see "decisive action" on the Prime Minister's innovation and competitiveness agenda, and a sharpening of his deregulation agenda.