The council’s draft report, a copy of which was obtained by the Australian Financial Review, says Australia needs to respond by investing in education and research and development, and by linking up with developing knowledge sectors in China and India.

There has been a steady progression up the value scale in work sent to low-cost countries – from manufacturing to data processing, call centres and computer software.

Now there is evidence that China and India are competing for high-level jobs in financial services, industrial design, architecture, research and development, engineering, medicine and even management areas such as human resources and business consulting.