Controversial ‘easement’ tax on powerlines soars by $10m in one year

Households will be hit with another power bill hike, thanks to sneaky state tax that industry groups say has “nothing to do with electricity” anymore.

Households will be hit with another power bill hike, thanks to sneaky state tax that industry groups say has “nothing to do with electricity” anymore. Picture: Andrew Henshaw

A sneaky state tax on land used for high voltage power lines has soared to a record $257 million, adding more pain to ballooning family and business bills.

The annual “easement tax”, which is passed straight through to consumers, has risen by almost $10m since the previous year.

On average it now adds more than $70 to each Victorian property’s bills, but large users such as manufacturers — already grappling with soaring gas and power prices — pay the largest share.

The tax was originally established to fund a subsidy for the Alcoa aluminium smelter in 2004, and is pegged to land prices.
The total tax grab will soar even higher once more transmission lines are built to connect new solar and wind energy generation to the grid, including hundreds of kilometres of high voltage lines planned for northern and western Victoria.

Australian Industry Group director of climate change and energy, Tennant Reed, said the easement land tax was “a bit more ridiculous and out of date every year”.

“If anybody proposed today a tax on electricity based on the value of land, they would be laughed out of the pub,” he said.

“We have an increase in transmission investment in front of us to better connect states and connect up new renewable zones, and there’s enough angst about the costs of that without the total costs of transmission to consumers being boosted by a very random tax that actually has nothing to do with electricity anymore.”

Mr Reed said the revenue raising would be less frustrating if money was used to help consumers by offsetting costs of new transmission investments or helping households implement energy upgrades.

Opposition energy spokesman David Davis said the “nasty electricity tax” was jacking up bills during a cost-of-living crisis because “whopping increases are passed through to households in full”.

He said Victorian households were being forced to cough up for Labor mismanaging the state’s finances amid soaring debt and it was “no wonder some many families are struggling”.

A Victorian Government spokesperson said the revenue from land tax on transmission easements “is used to fund government programs that benefit Victorians including the energy system.”

“Victoria has among the lowest wholesale electricity prices in the National Electricity Market, and our wholesale prices are much lower than NSW and Queensland.”

“The Government will continue to balance minimising the tax burden on families and businesses while delivering vital services such as schools and hospitals.”