Article by Adam Creighton in Buenos Aires, courtesy of The Australian.
15.11.2025
‘To be completely frank, if we have a net zero policy, I don’t know what it is. The bottom line is we need to create wealth.” This is what one of Argentina’s senior government ministers tells me halfway through an interview in Buenos Aires this week.
Luis Lucero, the nation’s Secretary for Mining, is far more interested in tapping Australian investment and know-how to harness Argentina’s vast yet underdeveloped mineral riches, with the hope of emulating Western Australia’s rags to riches story.
“This is my Australian inspiration,” Lucero declares, showing me his WhatsApp profile picture: an image of a large open-cut mine next to the township of Kalgoorlie.
As the Canberra bureaucracy continues to obsess over emissions targets that will never be achieved, President Javier Milei’s government is ruthlessly focused on slashing government regulations to unleash Argentina’s economic potential.
Fresh from a stunning electoral endorsement in the congressional elections last month, Milei’s free-market revolution is now moving into its second and more critical stage, with the potential to permanently transform the nation and deliver yet more humiliation to conventional economic wisdom.
“That’s what makes the President the happiest,” Economics Minister Luis Caputo tells me in an interview at the economy ministry opposite the presidential palace.
“The reality is that, yes, we have proved a lot of textbooks wrong because we cut the budget by 30 per cent in our very first months and there was no massive recession as numerous experts predicted,” explains Caputo, the most powerful minister inside Milei’s cabinet.
After decades of foolish Peronist policies – Argentina’s unique mix of socialism and fascism – the South American nation plunged from among the richest nations in the world a century ago (alongside Australia and the US) to around 70th.
At the time Argentina appeared to excel in only two things: football and economic instability. Since 1970, the nation has had five currencies.
Politically, the situation was just as parlous. In 2002, after defaulting on its international debts and triggering a depression, it had five presidents in a week.
A prolific libertarian economist turned TV commentator, Milei was elected president in 2023 on a radical platform of freedom and deregulation – all this within two years of winning a seat in Argentina’s congress.
Indeed, Argentina’s economy is expected to grow 5.2 per cent this year and 4.3 per cent next year, despite negligible immigration, according to the OECD, making it the fastest growing economy in South America.
Milei’s reforming government slashed federal spending by around 5 percentage points of GDP, in what was the biggest budget contraction in modern history anywhere, underpinning a welcome collapse in inflation from almost 300 per cent a year, or around 25 per cent a month, to a low of 1.5 per cent a month in May.
“This time it’s different because we’re tackling the root of the problem – the fiscal deficit – what people perceived as the actual problem (inflation) was actually the consequences of this problem,” Caputo says, noting that Argentina had not had a surplus in 13 of the Past 124 years.
The former finance professor and governor of Argentina’s central bank dismisses concerns that the 2.2 per cent inflation reading for October was a sign that progress was slipping.
“Over the last few months we suffered brutal opposition attacks; when politics becomes so violent, people get defensive, so it is normal businessmen would have to put up their prices,” he says.
It is hard to overstate the importance of the recent midterm election result, which saw Milei’s political party, Freedom Advances, win almost 41 per cent of the vote, more than doubling its representation in the House of Representatives to 101 seats in the 257-seat chamber. For the first time since democracy returned to Argentina in 1983, the Peronists lost control of the Senate, despite launching a vicious smear campaign against the President.
Federico Fernandez, founder and president of Fundacion Bases, a Buenos Aires think tank, says Milei was facing a coup a month before the election.
“There was a concerted campaign involving three powerful forces: the Peronist party apparatus, a significant portion of the economic establishment that had profited under the old corporatist system, and most of the legacy media, now desperate for the government advertising revenue that Milei had cut off”.
Miguel Boggiano, a high-profile Argentinian analyst and Chicago-trained economist, says reports that put the opposition parties’ win at 31 per cent of the vote understate the gravity of Milei’s win, because the actual opposition Kirchner party received only 25 per cent.
“If we were in 2027, Milei would have been re-elected president in the first round, because in Argentina, if you get above 45 per cent you’re president, and if you’re 10 percentage points above the next candidate, then you’re president as well,” he says.
Milei’s critics put his ultimate victory down to a so-called “bail out” by Donald Trump after the US Treasury provided a $US20bn swap line to Argentina to calm a volatile peso. But the panic in financial markets that prompted the US lifeline wasn’t because of Milei’s management of the economy, but rather concern that his party would do badly and reforms would peter out.
The Argentine stockmarket soared a remarkable 30 per cent the day after the election, prompting relief among Milei supporters that the socialist opposition parties weren’t about to return to power.
The economic achievements have been remarkable, especially given the contempt Milei’s agenda received from many supposed economic experts. Ahead of his election in November 2023, 170 economists from around the world, including such luminaries as France’s Thomas Piketty and India’s Jayati Ghosh, warned Milei’s “extreme right” proposals – which centred on slashing regulation and public spending – would cause “devastation” and “social chaos”.
“A major reduction in government spending would increase already high levels of poverty and inequality and could result in significantly increased social tensions and conflict,” they wrote, highlighting their cluelessness.
Gross federal government debt has fallen from over 150 per cent of GDP in 2023 to 73 per cent by April 2025, according to the OECD.
Poverty rates have fallen from 53 per cent to 32 per cent under Milei’s presidency, as lower inflation made life’s essentials more affordable for the bulk of workers.
But perhaps the most extraordinary results have occurred in the housing market. Milei abolished rent controls last year amid predictable fears those nasty landlords would jack up rents. On the contrary, the supply of rentable dwellings almost tripled and rents actually fell.
After falling for a decade, real wages for workers in the private informal sector, overwhelmingly the lowest-paid, have surged more than 50 per cent since early 2024, according to the OECD.
Shut out of international markets for decades, Argentina was starved of capital, severely hampered the mining sector in particular.
“We share the same mountains with Chile, the Andes, and Chile exports $US55bn a year of resources, and we export $US5bn,” says Agustin Etchbaume, director-general of Argentina’s main free market think tank Liberty and Progress.
With mounting confidence in the Milei government globally, investors (including BHP, Rio Tinto and numerous smaller miners from Australia and Canada) have started to return, announcing huge projects to develop the nation’s extensive copper, lithium and critical minerals. In October, OpenAI and Sur Energy announced plans to invest up to $US25bn to build a large scale data centre in Patagonia to support advanced artificial intelligence computing.
In November, the state-owned oil company YPF announced a partnership with Italy’s Eni to turn Argentina into a “world class” exporter of LNG.
Last week, Milei’s Minister for Deregulation, Fede Sturzenegger, the only new minister Milei has created after slashing the total number from 23 to 10, posted a picture online comparing the country’s pre-Milei regulations for wine and the new, dramatically smaller regulations that have been introduced since 2023, a reminder of how fiendishly complicated regulations had become. Last year, Argentina cut tariffs on more than 90 products and capitalised on the inefficiency of the remaining Argentinian bureaucracy by imposing a “silence is consent” rule for business approvals.
But Milei’s revolution has only begun. The Argentinian republican constitution, modelled on the US, grants the congress huge powers to reverse and veto presidential decrees, which has prevented Milei from making permanent legislative changes.
“The last session was terrible; the Peronists and their allies tore much of the executive’s work up, seeking to do maximum damage before the October 26 election. For congress it was a year of destruction, until now,” says Bertie Benegas Lynch, a prominent congressman in Milei’s party.
“It takes time, it’s not as if there’s an election, you push a button, Milei wins, and suddenly we’re Switzerland.”
The midterm elections mean Milei’s government should be able to legislate permanent changes to tax, employment law and the criminal code – the three top priorities according to most observers.
“For an employee to get 100 pesos, the employer has to pay 162,” Boggiano says, suggesting reforming labour regulations would be the administration’s top priority in the new year.
Thomas Olivera, who previously ran food distribution company Mayoristanet, explains the absurdity of Argentinian employment law, which acts as a massive disincentive to hire. Almost 50 per cent of Argentinian workers aren’t formally employed.
“I caught my staff stealing, they admitted it, but I still had to pay them. Every employee knows that he can sue and win,” he says, explaining this is why he got out of business. “By the way, because of these laws, have you noticed there are no more caddies in any of the country clubs in Argentina?” Indeed, a labour dispute a decade ago has meant that if clubs employ someone even for a few hours they become responsible for their social security contributions and health insurance.
“The media are squawking about workers’ losing rights but we are about liberty. If workers want to stay in the old system they can stay there, but if they want to switch into a new association with their employer they will be able to,” Benegas Lynch says, hinting at the direction the country’s new labour law might take.
While Milei successfully pared back the federal bureaucracy by around 50,000, the nation remains wedded to big government. The number of public sector employees is four million, double the number from 20 years ago. Meanwhile, full dollarisation of Argentina, which Milei canvassed during his election campaign, appears unlikely for now.
“Argentina is a country in which people really don’t trust the government, so it makes that very hard,” Boggiano says. “If the government announced it would convert pesos to dollars in bank accounts, you know what people would do? Show me the dollars! And if that’s the case, it’s not enough to have only the monetary base in US dollars, we would need to have enough US dollars to back all peso bank deposits.”
If Milei can reduce annual inflation to the single digits by 2027, by adhering to a strictly balanced budget, he has a very good chance of re-election.
“We feel after this election that probably we will have, luckily, six more years of a mandate … and we feel that it’s going to be probably the most successful story in the next decade,” Caputo says, in what could turn out to be a significant understatement.
One economist Milei likes to cite, Juan Pablo Nicolini, estimated last year the incomes of ordinary Argentinians could be 50 per cent higher by 2034, if Milei can stay the course.
That would be an epic turnaround, and one that would shatter traditional arguments in favour of big government to manage the economy.
“We’re going to exceed the levels of economic freedom of Australia, New Zealand, and Switzerland,” Milei told Lex Friedman in a podcast in early 2024.
If Australia manages to cripple its economy with high-cost energy, Argentina might one day exceed our income levels too.
Adam Creighton is chief economist at the Institute of Public Affairs. His trip to Argentina was paid by the IPA.
