Peter Dutton’s nuclear plan assumes states will shed $4 trillion in economic growth, Labor claims

Jim Chalmers has fired the first salvo in what is likely to be a sustained campaign of economic attacks by Labor on Peter Dutton’s nuclear plan, to be driven by the Treasurer himself.

Opposition Leader Peter Dutton. Picture: NewsWire / Roy VanDerVegt

Jim Chalmers will lead a new pre-election political attack on Peter Dutton’s nuclear energy plan, with the release of government modelling that suggests to work it would have to rely on the east coast states shedding $4 trillion of economic growth by 2050.

The Treasurer’s intervention into the nuclear debate marks an escalation in the energy wars between Labor and the Coalition, with the government under pressure over the cost and viability of its renewables-only model.

Federal Labor analysis of the Liberal leader’s nuclear plan released earlier this month, which showed it would cost half that of Labor’s, has claimed it was based on modelling that assumed up to $1.4 trillion in cumulative lost output in NSW to 2051.

When spread across the national electricity market, which includes Queensland, NSW, Victoria, South Australia and Tasmania, the lost output was closer to $4 trillion.

Treasurer Jim Chalmers. Picture: NewsWire / Martin Ollman

Mr Dutton this month released the Coalition’s nuclear plus renewables plan based on a Frontier Economics report that showed it would cost up to $263bn less than Labor’s renewables-only plan and result in cheaper electricity prices for consumers.

The new Labor analysis, which does not dispute the Frontier Economics modelling, was conducted in-house within the government, and not endorsed by the Treasury Department. It claims the lost output in the 2051 year alone in NSW would be $294bn in terms of lower gross state product based on the demand scenario the Coalition had chosen.

Labor’s argument is that the Coalition nuclear plan and cost are based on the energy market operator’s progressive change model, which assumes a 60 per cent increase in demand for electricity by 2050.

The market operator also modelled a “step change” scenario that assumes a far higher rate of demand for electricity by 2050 – almost double. This is Labor’s preferred scenario as it also assumes factors such as 98 per cent of all cars sold by 2050 being electric.

This is ambitious in the context of demand for electricity being relatively flat for the past decade, in spite of the economy growing.

The Coalition has accused Labor of deliberately conflating demand for electricity and economic growth.

The analysis by Dr Chalmers’ office, to be released on Saturday, is based on a NSW scenario that suggests Mr Dutton’s nuclear plan assumes $1.4 trillion in cumulative lost output in NSW to 2051.

A rendering released by the Coalition earlier this year on its concept design of a zero-emissions small modular reactor.

The analysis is based on an assumption of slower economic growth, which Labor claims would involve the closure of aluminium smelters and large industrial loads almost halving.

It says the Australian Energy Market Operator’s “progressive change” scenario assumes 1.89 per cent GDP growth per annum on average to 2050.

Dr Chalmers has accused Mr Dutton of trying to make his nuclear plan look cheaper than renewables only by contrasting it with AEMO’s central “step change” scenario, which assumes more energy is needed because there is 2.12 per cent GDP growth per annum on average to 2050.

The two scenarios suggest a difference in GSP across the National Energy Market of $4 trillion by 2051.

“Peter Dutton’s nuclear scheme is economic madness,” Dr Chalmers said.

“He will push energy prices up and growth down, and the people of NSW will be worse off.

“We now know for sure that Peter Dutton is the biggest risk to household budgets and Australia’s economy.

“He’d slow growth, push up power prices and come after wages and Medicare.”

Energy and Climate Change Minister Chris Bowen. Picture: NewsWire / Jeremy Piper

Dr Chalmers’ comments comprise the first stage of what is likely to be a sustained campaign of economic debate over summer driven by the Treasurer, with state-by-state assessments likely to be strategically released.

Labor insiders have privately raised concerns that Dr Chalmers had needed to step up earlier in the nuclear debate over concerns internally within the government over Energy Minister Chris Bowen’s handling of the political debate.

A NSW government spokesman would not offer a response to the federal Labor modelling but said the Minns government’s position on nuclear energy had not changed and it remained opposed.

The spokesman pointed to previous remarks by the Premier that there was no desire to remove the nuclear moratorium in NSW.

“I think it’s the same situation in Queensland. But the bottom line here is that nuclear power costs a lot of money and it takes a lot of time. And we don’t really have a moment to spare when it comes to renewing our energy grid and thinking about new sources of electricity generation,” Mr Minns said earlier this year.