Joining a chorus of critics who have panned the movie, starring Nicole Kidman and Hugh Jackman, Greer picks apart its storyline and accuses Luhrmann of glossing over the exploitation of Aboriginal workers.
She describes the film as a "fraudulent and misleading fantasy" designed to promote the federal government's policy of reconciliation.
Writing in Britain's Guardian newspaper, Greer picks apart the film's plot and points out what she claims are several historical inaccuracies about how Aborigines were treated in 1939, when the film was set.
"The scale of the disaster that is Baz Luhrmann's Australia is gradually becoming apparent," Greer wrote in The Guardian newspaper.
Greer likens the love story between Jackman and Kidman's characters to one out of a Mills & Boon romance novel and describe's the film's plot as "fatuous".
On the film's Aboriginal characters, Greer says the film's "greatest asset" is Brandon Walters, a 12-year-old Aboriginal boy who plays Nullah.
However, she describes as "unforgivable" Luhrmann's decision to have Nullah speak "in a cutesified stage version of pidgin".
Greer accuses Luhrmann of using acclaimed Aboriginal actor David Gulpilil's character King George as "a cigar-store Indian, standing on one leg, the other foot propped up against his knee, silhouetted against the skyline, spar and spear-thrower in hand".
"To the few viewers who will know that this motif has been used repeatedly as a trademark, it does seem that Luhrmann is making a tasteless joke," she said.
Greer also criticises Luhrmann for not choosing to depict how Aboriginal workers on the vast outback cattle property where the film is set would have lived in a collection of "filthy" humpies without being paid any money for their work.
17 Dec 2008.
Only not so long ago, the Anglo Colonists would go out in the mornings to "shoot their quota" of aboriginals. That is part of the REAL history of Australia, just like the Stolen Generations is as well.
One of the greatest problems, is that rubbish like this may be taught in schools in later years as an accurate description of events.