A prominent venture capitalist says Australians should be the richest people on earth but that decades of economic mismanagement has brought the nation to the brink of \u201cobscurity\u201d.<\/p>\n
Misha Saul has penned a scathing assessment of the Australian economy, saying the country\u2019s enviable natural resources, education, peaceful security environment and huge Asian customer base were all being squandered.<\/p>\n
Despite being dealt the best cards on the planet \u201csomething is rotten in the state of Australia\u201d, he has declared.<\/p>\n
<\/p>\n
In a blog post titled Australia is sick, Mr Saul blasted the two major political parties\u2019 fiscal policies since the end of the John Howard era, saying they were both \u201ccomplicit in two decades of bungling\u201d.<\/p>\n
\u201cNo nation has ever been dealt better cards. Yet we are failing,\u201d he wrote in the viral post published on Sunday.<\/p>\n
\u201cGDP per capita has been negative or sclerotic since 2023. The steepest fall in real household disposable income in the OECD and highest inflation in the Anglosphere. <\/p>\n
\u201cFertility at a record low. Capital-city houses at ten-plus times incomes. The list goes on. <\/p>\n
\u201cWe are on track for the grind into obscurity. We will have no one to blame but ourselves and we will not be able to say we did not know.\u201d<\/p>\n
Mr Saul is a co-founder of Dragonfly, a firm that aims to acquire service businesses and use artificial intelligence to turn them around.<\/p>\n
He left fund EVP last year after a dramatic saga following a $10.4 million investment in a pharmacy company called StrongRoom AI, which led to a court battle over allegations its leadership had misrepresented the company\u2019s financial position.<\/p>\n
Mr Saul is not accused of any wrongdoing in relation to the court matter.<\/p>\n
In his scathing blog post, shared by several of his colleagues in the finance industry on X, Mr Saul laid out what he believed were the biggest government missteps of the 2000s.<\/p>\n
First was the \u201ccatastrophic decision to abdicate immigration policy to the universities\u201d, under John Howard, which he claimed had \u201cdisfigured our universities into visa mills\u201d.<\/p>\n
He believed Australia\u2019s energy system had been \u201chobbled\u201d by attempts to cut emissions from 2007 and then pointed to the mass cost blow outs of the NDIS and Snowy Hydro 2.0.<\/p>\n
Mr Saul called the latter \u201cthe greatest white elephant in Australian infrastructure history, and it isn\u2019t even finished\u201d, with an initial $2 billion budget now expected to be north of $12 billion.<\/p>\n
\u201cSelf-congratulatory tears were shed when the Gillard government launched the NDIS, costed by the Productivity Commission at $13.5 billion a year at maturity, serving roughly 400,000 of the most profoundly disabled Australians,\u201d he wrote.<\/p>\n
\u201cIt now runs past $50 billion a year \u2014 more than Medicare (!) \u2014 with 740,000 participants and counting. <\/p>\n
\u201cWe could hand every one of the originally intended recipients $125,000 a year in cash and come out ahead. But that wouldn\u2019t feed an entire industry of parasites. Just try clawing those sweet dollars from their hands now. It\u2019s over.\u201d<\/p>\n
The Adelaide-raised entrepreneur bemoaned the \u201cabsurdities\u201d of banning drilling in some of the world\u2019s biggest liquid natural gas fields, the lack of use for Australia\u2019s huge uranium deposits and the regulatory barriers to work such as occupational licencing.<\/p>\n
He also pointed to the immigration intakes under Labor and Coalition governments, stating high levels had been pursued to either boost GDP or provide cheap workers.<\/p>\n
The Albanese government has been criticised for its level of public spending in recent years as the economy experienced prolonged periods of high inflation.<\/p>\n
Treasurer Jim Chalmers has maintained the government was cutting back on spending and was this year pointing to a faster-than-expected recovery in private sector demand for the nation\u2019s inflation woes.<\/p>\n
Top economist react to investor\u2019s scathing takedown<\/p>\n
Mr Saul evoked the infamous tale of how Argentina squandered its enormous prosperity in the early 1900s to become an economic basket case as a warning for Australia.<\/p>\n
AMP\u2019s chief economist Shane Oliver said he did not see Australia following the South American nation\u2019s path but worried our economy might need to experience a \u201ccrisis\u201d before it escaped its \u201cmalaise\u201d.<\/p>\n
Mr Oliver said productivity had been an issue for at least a decade, with the last major tax reforms coming in the shape of the GST under the leadership of Mr Howard and then-treasurer Peter Costello.<\/p>\n
He pointed to the growing public sector, which was now making up about 28 per cent of GDP, as a handbrake on an economy that was becoming less competitive.<\/p>\n
\u201cThe budget missed a golden opportunity to deliver a lot more (on productivity). It sort of lacked the vision that you might have got from, say, a (Paul) Keating or a Costello,\u201d he said.<\/p>\n
\u201cBut unfortunately, that\u2019s the sort of vision we need to get the economy moving again. But I don\u2019t think we\u2019re in a disastrous state here. It\u2019s recoverable but it needs a lot of effort to get things right.\u201d<\/p>\n
Mr Oliver said greater regulation in the workforce and the tax system falling into \u201cdisrepair\u201d were among other big drags on productivity growth.<\/p>\n
He mused that the volatile political landscape since Kevin Rudd\u2019s election in 2007 \u2013 with seven prime ministers in the past 19 years \u2013 bred a climate where lawmakers \u201clacked the boldness politicians of the past\u201d.<\/p>\n
\u201cI mean, to undertake economic reform does unfortunately require taking something away from some people,\u201d he said.<\/p>\n
\u201cThe history of revolving prime ministership, doesn\u2019t help prime ministers maybe think, \u2018well, I don\u2019t want that to happen to me so I\u2019ll just keep a relatively low profile and not do anything which is too controversial\u2019. <\/p>\n
\u201cIt just perpetuates the malaise.\u201d<\/p>\n
\u2018They\u2019re focused on crusades\u2019: Fund manager agrees<\/p>\n
Author and fund manager Roger Montgomery, giving his take on Mr Saul\u2019s analysis, agreed that the economy had fallen to ideologies and mismanagement.<\/p>\n
\u201cThe policy decisions aren\u2019t necessarily for the betterment of the country,\u201d he said,<\/p>\n
\u201cThey satisfy a small group of people who are, are ideologues who require their version of the world to be met.<\/p>\n
\u201cThey\u2019re focused on crusades \u2026 They want wealth distribution. <\/p>\n
\u201cBut these are the these are the things that you focus on if you\u2019re a rich nation, they\u2019re luxuries. But we aren\u2019t origination. We\u2019re now mired what\u2019s coming up to $1.3 trillion of federal debt that\u2019s not including state debt.\u201d<\/p>\n
Mr Montgomery also pointed to a need for serious tax reform to boost productivity, and like Mr Oliver, said more should be done to decentralise the economy and population away from the major cities.<\/p>\n
Venture capitalist\u2019s motivation for blog post<\/p>\n
Asked what his motivation for writing the piece was, Mr Saul told news.com.au it was born from a \u201clove for this country\u201d adding it was \u201chard not to worry about where we\u2019re going\u201d.<\/p>\n
He has previously written about his ideas for an \u201cambitious Australia\u201d, which involved becoming an energy superpower \u2013 including nuclear \u2013 poaching global talent, owning AI niches, tax reform and slashing bureaucracy.<\/p>\n
This week, however, he mused \u201cwe may be past the point of no return, where too many mouths are now dependent on government mismanagement\u201d.<\/p>\n
\u201cWe\u2019ve always had interest groups vying for their cut,\u201d he said.<\/p>\n
\u201cBut now the misalignment between the good of the country and the good of particular groups may be too high.<\/p>\n
\u201cAustralia is not alone. Similar demographic, political, economic, and institutional challenges seem to grip most countries. <\/p>\n
\u201cBut that is not an adequate excuse \u2026 Our decline has been self-inflicted.\u201d<\/p>\n
Mr Saul told news.com.au Australia had \u201ceverything going for us\u201d and he was hopeful the nation can turn course.<\/p>\n
\u201cI do believe the right individuals at the right moment can have massive impact,\u201d he said.<\/p>\n
\u201cBut as I wrote, structural challenges are making that increasingly difficult.\u201d<\/p>\n
Australia exposed by brutal real GDP growth chart <\/p>\n