Labor argues ‘economic madness’ of Coalition’s nuclear plan would cost NSW $1.4tn

The Coalition’s nuclear policy will cause a $1.4tn hit to New South Wales over the next 25 years, according to analysis Labor will use to attack the “economic madness” of Peter Dutton’s signature energy scheme.

The federal treasurer, Jim Chalmers, will on Saturday put a dollar figure on the impact on the NSW economy of the Coalition’s plan to build nuclear reactors at seven sites across Australia.

The Albanese government’s analysis is based on the assumption underpinning the Coalition’s costings that less electricity will be needed under its nuclear vision.

Chalmers has argued the Coalition’s plan for a smaller energy grid would result in an economy that is $294bn smaller, with $4tn in lost output, by 2051.

The analysis, to be released on Saturday, suggests that NSW alone would suffer a $1.4tn blow to the state’s economic output over that period, including $114bn in the year 2051.

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

The new analysis is likely to be quickly dismissed by the Coalition, which brushed off Chalmers’ claims of a $4tn hit to the national economy as “absolute and utter nonsense”.

Asked earlier this month if the Coalition’s plan would shrink the nation’s economy, the opposition’s treasury spokesperson, Angus Taylor, said Labor was already doing that.

The economics of nuclear energy has been thrust to the centre of the political debate after the Coalition released the long-awaited costings for its plan earlier this month.

Frontier Economics modelling suggested the nuclear plan would cost $331bn over 25 years, roughly $263bn cheaper than the estimated bill for Labor’s renewables-focused push to net zero by 2050.

However, the Coalition’s costs are modelled on a scenario – which the Australian Energy Market Operator calls “progressive change” – in which the electricity grid is far smaller than what is envisaged under the “step change” route preferred by Labor.

The rollout of electric vehicles, rooftop solar and the electrification of households and businesses is all expected to be slower under the “progressive change” pathway.

The scenario assumes GDP growth of 1.89% a year through to 2050, compared with 2.21% a year under the “step change” alternative.

The new federal analysis assumes heavy industry, such as aluminium smelters, would have to shut their doors after 2030 because there will not be enough energy to keep operating. That would spell danger for the aluminium smelters in the Hunter Valley in NSW and Portland in Victoria.

The NSW premier, Chris Minns, has repeatedly ruled out lifting the state’s nuclear power ban.

“The bottom line here is that nuclear power costs a lot of money and it takes a lot of time,” Minns said earlier this year.

“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.”