Former Anthony Albanese economic adviser Alex Sanchez has delivered one of the strongest public critiques yet of the Albanese government’s economic agenda, arguing Labor has drifted away from the pro-growth reform tradition that transformed Australia’s economy under former prime ministers Bob Hawke and Paul Keating.

Sanchez, who advised Albanese before Labor won government, used a speech at the Centre for Independent Studies (CIS) to argue that Australia is experiencing a prolonged slowdown in productivity and economic reform while government spending and intervention continue to expand.

He said Labor had abandoned many of the market-oriented principles that once defined the Hawke and Keating governments, replacing them with policies that rely more heavily on taxation, subsidies and government direction of the economy.

Reflecting on his time advising Albanese, Sanchez described the experience as something of a “Faustian bargain”, saying he had repeatedly argued for reforms that would encourage investment, productivity and long-term economic growth but had little success persuading the government to adopt them.

Among his recommendations were reducing Australia’s top personal income tax rate to below 30 per cent and lowering the company tax rate to 25 per cent in an effort to improve Australia’s international competitiveness.

According to Sanchez, those proposals were ultimately rejected in favour of maintaining relatively high tax settings while directing additional revenue towards expanding government programs.

He also criticised what he described as Labor’s growing enthusiasm for industry subsidies and targeted government intervention.

Sanchez argued that governments should create the conditions for private investment rather than attempting to determine which industries deserve financial support. In his view, Australia’s long-term prosperity depends on productivity improvements driven by competitive markets rather than expanding government involvement in the economy.

A central theme of Sanchez’s speech was Australia’s slowing productivity growth.

He warned that weak productivity has become one of the country’s most significant economic challenges because living standards ultimately depend on workers and businesses becoming more productive over time.

Without stronger productivity growth, he argued, governments will find it increasingly difficult to fund public services while maintaining sustainable public finances.

Sanchez also questioned the long-term sustainability of the National Disability Insurance Scheme (NDIS), noting that it now accounts for around three per cent of Australia’s gross domestic product.

He argued that expenditure growth within the scheme requires continued reform to ensure services remain available while protecting the broader federal budget from escalating long-term costs.

His comments reflected concerns that have been raised previously by governments of both political persuasions regarding the pace of NDIS spending growth.

The former adviser further criticised what he described as Labor’s increasing ideological shift towards policies traditionally associated with the Greens.

He suggested the government had become more focused on raising revenue through taxation than encouraging capital formation and investment, warning that this approach could reduce Australia’s attractiveness as a destination for business and investment over time.

Sanchez also expressed concern about internal decision-making within the government.

He argued that Prime Minister Albanese exercises unusually strong authority over both the ministry and the parliamentary Labor Party, leaving relatively little room for internal disagreement on major economic policy questions.

In that context, he praised ministers who had publicly expressed alternative views during recent policy debates, arguing that healthy internal discussion produces better government.

The criticism stands in sharp contrast to the government’s own assessment of its economic record.

Labor argues its policies have been designed to reduce inflation without triggering a recession, deliver cost-of-living relief, rebuild wages growth, expand renewable energy investment and address longstanding structural challenges such as housing affordability and skills shortages.

The government has also pointed to tax relief for lower and middle-income earners, investments in manufacturing through the Future Made in Australia agenda and reforms intended to strengthen Australia’s long-term economic resilience.

Treasurer Jim Chalmers has consistently argued that economic reform should balance productivity with fairness, maintaining that Australia’s future competitiveness depends not only on encouraging private investment but also on improving workforce participation, education, skills and infrastructure.

Government ministers have rejected suggestions that Labor lacks an economic reform agenda, pointing instead to workplace relations changes, energy transition policies and investments designed to strengthen future industries.

Sanchez, however, contends those initiatives do not match the scale of reforms introduced during the Hawke and Keating era.

Throughout the 1980s and early 1990s, Labor governments floated the Australian dollar, deregulated financial markets, reduced tariffs, introduced compulsory superannuation and reformed industrial relations—changes widely regarded as among the most significant economic reforms in modern Australian history.

According to Sanchez, today’s Labor government has instead relied more heavily on public spending and targeted intervention while avoiding similarly transformative structural reforms.

The intervention has also attracted broader attention because Sanchez remains a longstanding Labor member despite his criticism.

His remarks therefore carry particular weight among political observers, who note they come from someone previously involved in developing Labor’s economic strategy rather than from a political opponent.

Business groups have likewise continued raising concerns about Australia’s productivity performance.

Recent surveys of business leaders have identified declining productivity, increasing regulation and rising compliance costs as major challenges facing Australian companies, although opinions differ over how governments should respond.

Economists remain divided on the appropriate balance between market-led reform and government intervention.

Supporters of Sanchez’s approach argue lower taxes, deregulation and increased competition would strengthen productivity and investment.

Others contend governments have an important role in supporting strategic industries, investing in infrastructure and addressing market failures, particularly during periods of global economic uncertainty.

Those competing philosophies continue to shape Australia’s economic debate as the Albanese government enters the next stage of its parliamentary term.

Whether Labor embraces further market-oriented reforms or continues pursuing its current policy direction is likely to remain a central question for business leaders, economists and political commentators.

For now, Sanchez’s unusually candid assessment has added a prominent internal Labor voice to the ongoing national debate over productivity, taxation and the future direction of Australia’s economy.