Mr Keating flicked a few barbs at foes and colleagues, both old and new, as he spoke with historian Robert Manne about his collection of post-prime ministerial speeches, After Words, at the Wheeler Centre.

''Labor hasn't lost its soul, but it has lost its story,'' he said.

Australia was going through perhaps the greatest transition of the past 300 years - the rise of China to a position of influence it had not held since the 18th century.

''It is changing the way the world works … It's not beyond the wit of the Labor Party - it shouldn't be - to construct a story of transition and to see everything they are doing in the story, like the carbon tax, like the mining tax.''

Mr Keating said political ''static'' in polls and social media would hijack the national conversation in the absence of big ideas. ''In the end, the key ingredient for public life is imagination. You imagine something better, you try to bring people with you,'' he said.

The issue of refugees and a ''poisonous'' race debate were pressing challenges.

''The biggest single challenge is to have Australia psychologically wish to be part of the region around it. Australia must find its security in Asia, not from Asia.''

Mr Keating told an enthusiastic crowd that developing economies were driving the world's economic growth, yet ''we think we can have a debate about the circumstances of someone's birth and their complexion, how they look. I mean, it's sick, sick, sick. This is very sick.''

He said conservative parties all over the world were united by an exclusive and selfish nationalism.

''The Labor Party in my years did not have this in common with those parties on immigration and citizenship,'' he said.

Australia's record on indigenous affairs had discredited the country in Asia, as had adherence to British rule ''by the way we still have Queen Elizabeth II as our head of state and by the way we still wave our little flags - it's just so weak''.

Asked if new life would be breathed into the monarchy when Prince William and his ''attractive'' wife took the throne, he said: ''God help us. You couldn't breathe life into that old horse.''