Prime Minister Tony Abbott says we have all benefited from Britain’s original foreign investment because Australia was “unsettled” before the British arrived.

Delivering the keynote address at The Australian-Melbourne Institute conference on Thursday night, Mr Abbott was asked about the importance of foreign investment in residential real estate and its contribution to economic growth.

Mr Abbott said it was a contentious issue, and also an “emotional” one, because “if I want to sell my place [then] foreign investment might make sense, but if my neighbour wants to sell his place [then] foreign investment might be the last thing we want”.

When explaining why foreign investment was so important for a country like Australia, Mr Abbott said the country would be unimaginable without it.

“As a general principle we support foreign investment. Always have and always will,” he said.

“Our country is unimaginable without foreign investment.”

“I guess our country owes its existence to a form of foreign investment by the British government in the then unsettled or, um, scarcely settled, Great South Land,” he said.

Mr Abbott compared the challenges his government faced to deliver its unpopular budget reforms in the face of a hostile Labor party and senate to the reforms of the Hawke Keating era, which enjoyed bipartisan support in many cases from John Howard's Liberal party.

''The only time reform has looked easy was under Bob Hawke and Paul Keating, because the only real opposition they had was internal,'' Mr Abbott told the audience.

Later in the Q&A, Mr Abbott also praised Bob Hawke for being the best leader the Labor Party has probably had.

''There's no doubt that the period between 1983 and 2007 was the golden age of reform,'' Mr Abbott said.

''Towards the latter part it was the golden age of prosperity as well. Let’s look at the authors of those reforms - Bob Hawke, Paul Keating, John Howard, Peter Costello. All of them great contributors.

''Hawke [was] almost certainly the best-ever Labor prime minister. Howard [was] certainly the best prime minister since Menzies.

''I think all of them have got things to teach us, but as in most things I would regard John Howard as the supreme teacher.''

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