The Wallabies head into Saturday's Rugby Championship match against Argentina on a four-match losing streak, their last Test an abysmal 38-12 capitulation that gave South Africa their first win at Brisbane's Lang Park after nearly 50 fruitless years.
New coach Ewen McKenzie has remained defiant under pressure, insisting the team will stick to their goal of playing with "ambition and flair", even as fans clamour for a win of any kind to lift the team from the bottom of the table.
Dwyer, who coached the Wallabies to their first World Cup triumph in 1991, told Reuters McKenzie's idea would remain a pipe-dream while the team failed to implement the most basic fundamentals of the game.
"It seemed to me, at the start, we were heading in the right direction, certainly in terms of selections," Dwyer said of the former Test prop's two months at the helm.
"I don't think we've gone ahead at all. I know we've played against strong opponents and I know our forwards have struggled, but I look at some of the factors that underpin quality performance and I see that we're definitely not getting any better there and that's a real worry to me.
"Straight running, clearance of the ball, accurate support play, urgency in realignment in attack and in defence, numbers at the tackle contest ...
"Maybe to get the full message across it does take time perhaps but I don't see how long it would take how long it would take to implement these things.
"If they're not there you can't perform at your best.
"It seems to me that there's an absence of a belief that these things are important."
Since replacing Robbie Deans in the wake of the deflating series loss to the British and Irish Lions, McKenzie has made his presence felt by dropping veteran loosehead prop Benn Robinson and blooding a new fly-half in Matt Toomua.
McKenzie has continued to tweak his starting side, bringing Quade Cooper back as starting fly-half and shifting the dangerous Israel Folau from the wing to full-back, but the net result was the most discouraging performance of their tournament against South Africa.
"I'm not too sure what the game plan was. They wanted to move the ball around, shift the ball and run the Springboks around," Dwyer said.
"I worry about those sorts of comments, it's not whether you play wide or close that counts, it's how you do it. It's with the 'how' that we're falling down.
"I think we're no certainty against Argentina at all. I'm concerned about Saturday's game."
With the Wallabies appearing ripe for an upset by the Pumas, McKenzie has made his most audacious selection yet by demoting scrum-half Will Genia to the bench in favour of rookie Nic White, and naming backrower Ben Mowen captain in just his seventh Test.
Dwyer, among a number of pundits who called for Genia to be dropped, would have liked McKenzie to have gone a step further by leaving fly-half Cooper, Genia's Queensland Reds team-mate, out as well for the Perth clash.
"I'd have Toomua (as fly-half) in mine," Dwyer said of the Brumbies pivot, who will warm the bench for a second straight match after starting twice in the two opening defeats against the All Blacks.
"I thought he was below par in the first Bledisloe Cup Test (against New Zealand), but add it all up, Will's got a lot to do with it."