They've changed their game in recent years and it hasn't been successful.
"So [head coach Stuart] Lancaster will get some stick in the press.
He's tried hard, Stuart, no doubt about that. He has good standards in his team, good culture, but they're not good enough at this level."
Henry agreed the match underlined that Australia is bona fide World Cup contender.
"The big thing about the Australians is they have some stability up front and the most embarrassing thing for the English was the way the Australians dominated the scrum. And they got better as the game went on. That has been their Achilles heel in the past and that's why England has beaten them in the past - they couldn't scrum."
Henry hailed the impact former Argentina forward Mario Ledesma has had since being appointed scrum coach. "He's done a brilliant job. He's turned them around."
Henry also supported his All Blacks successor Steve Hansen, who has been at pains to soothe growing anxiety in New Zealand after the muddling win over Georgia, even suggesting the team is holding back so they don't reveal their hand too early in the tournament.
Henry said that made sense.
"I remember coaching the team in 2007, we beat Italy in the first game of the 2007 Rugby World Cup by 90 points, playing outstanding rugby.
We just creamed the pool games and got beaten in the quarter-finals.
"I think the All Blacks are in great shape because they won't get ahead of themselves, they won't get over-confident, they know they're not playing as well as they should, they know they have to get better... what greater situation can you be in?
"I just think they were a wee bit overanxious [against Georgia]. When it comes to the big games when there are some real challenges, that will bring out the best in them.
"I understand what they are going through. When they get to the quarter-final against Ireland or France at the Millennium Stadium, they will be in great shape and they will play well."