Legislative flaw devalues $200,000 transmission line compensation

A legislative flaw has devalued the Victorian Government’s transmission line compensation payments to landholders.

The Victorian Government will pay out a total of $80 million in compensation to lanholders along transmission lines over 25 years, while pulls in an extra $71m in land tax each year.

A legislative flaw is eroding the value of the Victorian Government’s $200,000 per kilometre compensation payment to landholders forced to host transmission lines.

Energy Minister Lily D’Ambrosio’s National Electricity (Victoria) Amendment (VicGrid) Act 2024, which passed through both houses of Parliament in May, failed to index all payments from the day the scheme was announced.

Accountant and farmer Peter Knights, whose property is on the proposed route of the VNI West transmission line, said the failure to index the $200,000 meant its real value would decline over time.

The $200,000 will be paid out in annual instalments of $8000 over 25 years and is on top of the Land Acquisition and Compensation Act payments that cover the market value of the land under the transmission easement.

The Act states the initial payment to farmers remains at $8000, whether an easement is taken out over their land today or in five, ten or more years’ time.

But the value of that initial $8000 payment will decline over time, with an inflation rate of 3 per cent leading to it being worth about $6900 in five years and $5900 in 10 years.

The Act does allow for payments to be indexed, but only after the first $8000 payment is made to a landholder.

“If you start that 25 year period five years late it’s not worth $200,000, (but) more like $180,000,” Mr Knights said.

Chris Rule pocket toon 1

All up the government is set to pay total compensation of $80m to landholders along the 400km VNI West and Western renewable Link corridors over the next 25 years.

But the State Revenue Office is also set to collect an extra $71m a year in easement land tax from the transmission companies, which will be indexed every year.

The Weekly Times asked Minister D’Ambrosio why she allowed the Act to go through, when it seriously disadvantage landholders who may not have transmission easements taken up on their properties for several years.

She was also asked if the government would remedy the problem and if it was the government or transmission companies making the payments.

But Ms D’Ambrosio ignored the questions, simply stating “the Government has heard clearly from regional communities that the benefits of the energy transition need to be shared fairly, especially with those communities hosting new infrastructure.”

In the meantime the government is also considering diverting taxpayers’ revenue to Community Energy Funds, under the guise that it is a contribution from transmission companies and renewable developers.

The government’s Draft Renewable Energy Zone Community Benefits Plan: “proposes that transmission companies will contribute $8,000 per kilometre of new transmission easement per year for 25 years to the REZ Community Energy Funds in relation to the full length of the infrastructure, both in and out of Renewable Energy Zones.

“These contributions are proposed to come out of transmission companies’ existing Easement Land Tax payments.”

“It is also proposed that generation, storage and hybrid (combined generation and storage) projects will pay access fees to connect to the transmission network in Renewable Energy Zones, which will contribute to the REZ Community Energy Funds.”

Regional Victorian Power Alliance chair Vicki Johnson said the reality was transmission companies were “not making any contribution whatsoever”, given the government was simply diverting land tax that was already owed into the community funds.

“The government is making out transmission companies are taking the load for the funds,” Ms Johnson said.

“But there is no additional cost to the companies, as they are still paying the same land tax. They’re just virtue signalling.”

Mr Knights said the payments into the funds were effectively a “non-contribution”.