The Treasury has hit back at a prominent fund manager, financial commentator and author who held up an ugly mirror reflecting the state of Australia’s economy — saying the nation is in a state of “disaster”.
In a statement to news.com.au a Treasury spokesman said that, in the face of intense global uncertainty and volatility including a the supply shock from Russia’s invasion of Ukraine, Australia has recorded faster annual growth than every major advanced economy except the US.
“Every major advanced economy has recorded at least one negative quarter, but Australia has avoided one,” he said.
“We have a big growth agenda that we laid out in the budget. Our efforts in National Competition Policy alone could boost GDP by $13 billion, we’re cutting regulatory costs by $10.2 billion and we’re promoting $400 million more investment in R&D by young firms each year.”
Australia in a state of ‘disaster’
The statement comes after Roger Montomery, founder and chief investment officer of Montgomery Investment Management, posted a scathing video on his Instagram page about Australia’s GDP and what it means for everyday Aussies.
To illustrate this, he highlighted dismal figures showing the nation’s real per capita GDP which he said was a “disaster” for everyday Aussies because it translated to how we were all doing financially.
“GDP is a mirror on how you feel economically,” he told news.com.au. “What it does is confirm what you are feeling.
“If you feel like you are going backwards, if you feel like everything is harder and more expensive, then when you look at real inflation-adjusted GDP per person, you can see under the Albanese government that it has been negative for the longest period of time in modern Australian history.
“It shows exactly that you are right. It is tougher.”
Damning chart comes to light
He shared a graph from conservative outlet The Spectator that compared GDP growth under each Australian government since 1976.
Real per capita GDP growth measures living standards because it adjusts for inflation and population changes, showing the average quantity of goods and services produced per person.
If Australians produce goods and services at a faster rate than population growth, however, real GDP per capita rises, which generally leads to higher material living standards because more goods and services are available per person, increasing average income and consumption.
The chart shows that real per capita GDP rose by more than 30 per cent during the Hawke/Keating government, a period of major reforms that transformed Australia into an open, globally competitive economy.
However, the chart shows just modest rises under Rudd/Gillard and the Coalition before significantly weakening under the Albanese government.
Adding more people to the economy grows overall GDP, but if each worker doesn’t become more productive, the economic pie is sliced into smaller pieces.
In real terms, Mr Montomery said, this explained why Aussies were “running faster just to stay in the same spot, or you are going backwards”.
“Australia is number one or number two globally for median wealth per adult, and that is largely because of home ownership,” he said.
“Not only have we now had the longest continuous stretch of negative quarterly per capita GDP in modern Australian history, but the government has also blown up the property market, which was the primary source of wealth for two-thirds of Australian households.”
He said this would hurt Aussies further because of something called the “wealth effect”.
“When people’s houses are going up in value, they tend to borrow against those homes to buy cars, renovate, go on holidays, or spend money,” he said. “When house prices go backwards, people pull their heads in and stop spending.
“After the pandemic, even though interest rates were rising, people were still spending money — particularly baby boomers. Now, everyone has turned the tap off.
“Because people are not spending, we are seeing a decline in retail spending, which is the third-largest employer in the country, and a drop in construction and renovations, which is the second-largest employer.”
He claimed productivity was plunging because the government kept employing people in public sector roles who were largely “paper-shufflers and compliance officers”, rather than producing goods or services we could export.
“Our economic growth is disproportionately supported by government spending and essential services, which causes an effect known as crowding out the private sector. Private investment and real consumer demand remain weak as a result,” he said.
“Consider all the major infrastructure spending on roads and tunnels. If you are on a government contract with a union-supported labour-hire firm, you are working comfortable six- or seven-day fortnights with great conditions, early finishes, and high pay.
“The alternative is working in the private sector, which pays less and requires harder work. That sucks up a huge amount of labour. If an everyday person wants to renovate a bathroom, build a garage, or add a bedroom, it is much harder to find a builder, and it is far more expensive because private sector builders have to pay more to compete with the government.” He warned that the bigger public sector became, the less productive the country became.
“Eventually this per capita recession will turn into a wider nominal recession,” he said.
Treasurer Jim Chalmers has consistently pointed to the global economic headwinds
Treasury says Australia is doing well
The federal government has hit back at Mr Montgomery’s claims, saying the nation is doing doing better than many of its international peers economically.
The Government came to office and immediately had to deal with the supply shock from Russia’s invasion of Ukraine.
In per capita terms, GDP grew 1.0 per cent through the year to the March quarter. This was faster than all the G7 except the US and faster than New Zealand.
It’s not uncommon for quarterly GDP per capita to go backwards. It has gone backwards about a quarter of the time (56 out of 210 times) since records began in 1973, including four times when Scott Morrison was PM.
We saw growth pick up substantially across 2025 and into the start of 2026.
The economy grew 2.5 per cent through the year to March quarter 2026 – the equal fastest pace of annual growth in almost three years.
Mr Montomery conceded Australia was being hit by macroeconomic factors and was also exceptionally sensitive to global economic factors, particularly China, which buys a third of our exports.
“We are a commodity nation heavily dependent on raw materials,” he said. “To put it in perspective, we need to export between eight and ten tonnes of iron ore just to afford a single iPhone.
“We are one of the few developed economies where GDP figures shift dramatically based on global commodity prices for iron ore and LNG.”
He said if we wanted to make Australia more resilient and improve the country, we needed to use tax incentives to support start-ups that added value to our exports, rather than remaining purely commodity-dependent.
“We need to start making things here again. But if you are drip-feeding the economy by raising taxes, you turn the tap off for the private sector and destroy the incentive to invest,” he said.
“To fix the GDP issue, productivity has to be the priority. You have to stop waste and reduce national debt, because a significant proportion of tax revenue is currently consumed just paying interest on accumulated debt.
“Lowering that debt frees up cash flow to incentivise a more productive economy. We need to lower corporate taxes, establish free trade zones, and focus on nation-building.”
He said he wanted to speak out because the youth were being fed a “bait-and-switch” by the government.
“They are told the government supports them and will make things fair, but policies like accumulating $1.3 trillion in national debt mean teenagers and twenty-somethings today will be the ones forced to pay it off,” he said.
“When the government serves up rhetoric about supporting young people, their policies are actually making life much harder for them.”