The federal treasurer says the Coalition’s nuclear policy costings suggest a $4tn hit to Australia’s economy over the next 25 years, based on its assumption that the economy will be smaller with less need for energy.
Jim Chalmers on Sunday also conceded that the mid-year budget update to be released this week would reveal bigger deficits than the May budget, describing the revision as “slippage”.
Chalmers ridiculed Friday’s modelling underpinning the Coalition’s nuclear costings for what it assumed about the economy by 2050. He said the proposal was a recipe for shrinking the economy to $294bn by then.
“What we saw from the opposition was a recipe for lower growth, a smaller economy, less energy and higher prices, and it raised more questions than it answered,” he told Sky News.
“In terms of the lost output between now and then for people who rely on the national energy market, it’s about $4tn.”
Anthony Albanese predicted that the Coalition wouldn’t be able to reverse the national moratorium on nuclear power imposed when John Howard was in office.
“What you have here is the National party tail wagging the Coalition dog and Peter Dutton being too weak to stand up to the ideologues who dominate the Coalition,” the prime minister told reporters on Sunday.
The opposition’s Treasury spokesperson, Angus Taylor, dismissed criticisms of the nuclear policy, defending its reliance on government funding and labelling the critics “squawking vested interests”.
Asked if the Coalition’s plan would shrink the economy, Taylor said Labor was already doing that.
“It’s completely unprecedented,” he told Sky News. “We’ve never seen the hit to household disposable incomes, the standard of living of Australian households, like we’ve seen since Labor came to power – not at any time in the past.”
Chalmers separately said slowing growth in the economy, a write-down in mining exports, lower company tax receipts and spending on government programs – including overhauling the veterans’ claims system – would contribute to a worse-than-expected bottom-line result over the next four years.
“There will be substantial pressures on the budget,” the treasurer said.
“There will be some slippage in some years – not in every year – even as we work to tighten the budget in the year that we’re in now.”
Chalmers cited spending on natural disaster preparedness, Medicare and childcare as adding to the pressures. He said the government had “been able to do a little bit better in the near term” but flagged slippage in other years. The May budget forecast a deficit of $28.3bn for 2024-25.
“The overall story since we came to office – two surpluses, a huge turnaround in the budget situation that we inherited, much less debt, much less interest on the debt – will show that we’ve made really very, very substantial progress,” he said.
The treasurer confirmed that the mid-year economic and fiscal outlook, or Myefo, would be published on Wednesday. He declined to comment on suggestions that last week’s lower unemployment rate of 3.9% made it harder to justify an interest rate cut, arguing it was possible to lower unemployment and create jobs while also lowering inflation, increasing wages and growing the economy – albeit only barely.
“So those numbers really represent the sort of soft landing that we’re going for,” he said.
Chalmers said the composition of the two new Reserve Bank boards would be revealed as soon as Monday, under the split structure parliament endorsed two weeks ago.
One board will oversee the bank’s governance and the other will deal with monetary policy and set interest rates.
This starts in March, meaning the new monetary policy board will consider whether or not to cut the cash rate in April – possibly right before the election.
Taylor suggested Chalmers was politicising the board.
“Anything other than taking the existing board, and transitioning it to the new board is, I would say, political,” Taylor told Sky. “It’s a sack-and-stack strategy, as I’ve said, all the way along.”
Chalmers said nobody from the current RBA board was being sacked.
