Economist Leith van Onselen has issued a stark warning that Australia could face a future similar to Argentina, characterized by collapsing living standards, if current economic policies persist. Van Onselen described Australia as being caught in a "stagflationary mess" of high inflation and minimal per-capita economic growth, suggesting the economy is not genuinely improving for individual citizens.
During an appearance on 2GB, van Onselen stated that declining living standards are a primary driver of public dissatisfaction, leading many Australians to feel the economy is no longer serving their interests. This sentiment, he noted, is prompting a turn towards political alternatives like One Nation. "They feel like they're not getting ahead. (It) feels like life's a lot harder, right? I think we can all accept that," he told host Luke Grant, referencing the diminished purchasing power experienced by households.
Van Onselen drew a parallel with Argentina, a nation that he noted transformed from a wealthy country to a poor one. He cautioned that Australia risks a similar trajectory over the next 20 to 30 years if excessive government spending, weak productivity, and high levels of migration are not addressed. Argentina has experienced significant economic turbulence, with inflation falling from 211 percent in 2023 to 31.5 percent by the end of 2025. However, experts suggest this decrease reflects falling real wages rather than a robust economic recovery, with manufacturing output dropping and thousands of jobs lost since late 2023.
This assessment contrasts with official figures, such as the Australian Bureau of Statistics' report of 0.4 percent GDP growth in the June quarter and 2.1 percent for the last financial year. Treasurer Jim Chalmers had declared Australia's GDP growth to be "stronger than every major advanced economy." However, van Onselen contested this, labeling the claim "highly misleading." He argued that Australia's high population growth rate, which outpaces many developed nations, inflates headline GDP figures.
Van Onselen emphasized that per-capita growth offers a more accurate measure of economic well-being. According to his analysis, Australia's per-capita growth was effectively zero in the June quarter and has declined by 0.3 percent since the current government took office in mid-2022. Data from the OECD indicated that Australia's real per-capita household disposable income, a key measure of living standards, has been among the weakest in the developed world. He noted that real wages are approximately six percent below their mid-2020 peak and are at levels not seen since 2011.
The Reserve Bank of Australia's forecasts suggest minimal real wage growth over the next three years, with wages projected to remain five percent below their peak and at 2011 levels by the end of 2028. Van Onselen identified declining productivity as a critical issue, noting a five percent drop since March 2022, which he described as one of the weakest performances in the developed world over the past decade.
To reverse these trends, van Onselen recommended a more targeted migration program focusing on quality, reduced government spending, industrial relations reform, and tax reforms based on the Henry Tax Review. He believes these measures are essential for boosting productivity and improving living standards.
Argentina's economic situation has been marked by significant challenges, including a dramatic drop in manufacturing output and widespread business closures.
