News Corporation chief Rupert Murdoch has dismissed the claims as 'rubbish' which said Australia is ill-prepared for the 21st century and its 21 million strong population could not compete with the burgeoning middle classes of India and China.

Speaking to a strong crowd of about 500 business leaders and media personalities, Murdoch, an Australia-born US citizen, expressed his strong feeling for Australians stating the country meant 'a great deal to him'.

Pointing at growing Indian and Chinese economy, he said, "For most of my lifetime, the people of these great countries were incarcerated by communism or caste. In sheer numbers, the emergence of India and China as economic powers and the wealth that they are creating is accompanied by a rise of a new middle class."

He said: "Over the next 30 years or so two or three billion people will join this new global middle class. The world has never seen this kind of advances before.

"These are people who are intent on developing their skills, improving their lives and showing the world what they can do. And they live right in Australia's neighbourhood," he warned.

"The alarmists will tell you Australia cannot compete with these nations. That is rubbish. In this new world, Australia has many advantages. These advantages include being an open, democratic and multi-racial society, built on the rule of law. 

"We have great resources as a civil society with a tradition of generosity and support," he said, adding, "To compete well and use our human capital to the best, we will have to draw on these advantages and make our country stronger."

"That means being less dependent on government, less complacent about our national institutions, more willing to accept radical reform, and more trusting in our creativity and our competence," he said.

Murdoch also warned that Australians were headed in the wrong direction with their increasing dependency on the welfare state.

"The pro-business and pro-globalisation approach of the Prime Minister Kevin Rudd was a 'good start', but the government had to avoid 'institutionalising idleness' and end 'subsidies for people who do well'."

The media billionaire also took a stand on climate change, urging the government to give the planet "the benefit of the doubt" and invest heavily in technology for clean energy, rather than punish its economy by embracing emission targets 'that the rest of the world will never meet'.

On national security, he said 'we need to be more than a reliable partner that the US can call on. NATO was fighting issues well beyond its borders and not every member was doing their fair share in places such as Afghanistan.