Federal Treasurer Jim Chalmers has launched a sharp critique of the Coalition’s emerging energy policy, warning that plans to extend the life of ageing coal-fired power stations could cost the federal budget more than $17 billion and drive up power prices across the country.
Speaking on ABC Radio National on 26 November, Chalmers described the Opposition’s approach as a “harebrained” proposal that threatens both investor confidence and national finances.
“What the Coalition is proposing with this harebrained approach to net zero would push up power prices and swing a wrecking ball through the budget and the economy,” he said. “They want to subsidise the extension of these ageing and increasingly unreliable coal-fired power assets… and you arrive at a multi-billion-dollar cost to the taxpayer.”
The Treasurer’s remarks were timed ahead of a speech by Opposition energy spokesperson Ted O’Brien at the National Press Club, in which the Coalition was expected to outline its stance on the future of coal in the national grid.
Chalmers said the modelling used to produce the $17 billion estimate was based on known closure schedules from 2028 and existing subsidies used to prop up older stations.
“The thing that’s putting the upward pressure on energy prices in our grid is not the new, cheaper, cleaner, renewable, reliable energy that we are introducing,” he said. “It’s the fact that the older traditional sources of energy are becoming less reliable.”
The Coalition, while yet to release a detailed energy plan, has hinted at maintaining some coal-fired generation to provide baseload stability during the transition. Chalmers acknowledged that states like New South Wales have made exceptions to keep some stations running temporarily, but criticised the Opposition for making this approach central to their policy.
“What the Coalition is proposing to do is to rely on extending these coal-fired power plants as their policy… the consequence of all of that would be power prices which are higher, not lower.”
Pressed on whether the modelling is speculative given the Opposition’s lack of formal policy, Chalmers maintained it was important to scrutinise public comments and early signals from the Coalition.
“They can’t tell us how much it will cost to extend all of these coal-fired power plants… and the reason why they are in such a mess on energy is because their approach is driven 100 per cent by internal party politics.”
When asked why power prices have continued to rise despite the government’s promises of relief, Chalmers blamed legacy issues and stressed the long-term benefits of renewables.
“We’ve been playing catch up,” he said. “The upward pressure on prices comes from the ageing part of the fleet, not the new part of the fleet. The cheapest way to replace that increasingly unreliable part of the system is with renewable energy.”
The interview also turned to budget matters, where Chalmers defended Finance Minister Katy Gallagher’s request for public service agencies to identify lower-priority spending, rejecting claims that this amounted to cuts.
“What we’ve asked departments to do is what we ask departments to do before every budget… to identify and suggest areas of lower priority spending so that we can redirect it to higher priority areas,” he said, adding that the same process had helped Labor redirect $100 billion in previous budgets.
He rejected criticism from Opposition Deputy Leader Sussan Ley, who accused the government of breaking promises not to cut public sector spending.
“They went to the election with a policy for lower wages, higher taxes, bigger deficits and more debt to pay for nuclear reactors,” Chalmers said. “Our Labor Government is defined by responsible economic management.”
Asked about progress since the Economic Reform Roundtable held 100 days ago, Chalmers pointed to a string of regulatory and investment reforms, saying the roundtable would help shape the upcoming federal budget in May.
“There is an absolute mountain of work going on behind the scenes and it will be one of the major influences on the budget that we hand down in May.”
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