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Renewable energy generators could be hit with fire service levy bills up to 25 times what they currently pay, sometimes adding millions of dollars to the costs of running projects, as the state government plans to count wind turbines and solar farms in land valuations.
The Clean Energy Investment Group, which advocates for investors in renewable energy, said the levy would be 10 to 25 times higher for renewable generators in Victoria if an amendment to change the laws passed parliament.
The Bald Hills Wind Farm in Tarwin Lower, South Gippsland.Credit: Benjamin Preiss
“Because those assets are very high value, that would drastically increase the amount that the [levy] is calculated on,” the group’s policy director Marilyne Crestias said.
Treasurer Tim Pallas introduced 12 amendments to state taxes in October, the first of which were announced in a flurry of confusion at a property industry breakfast where he revealed plans to expand levies on vacant and undeveloped land.
Defending the bill at the time, Pallas said the other amendments just tidied up the law.
The bill would confirm that any object fixed into land, such as a wind or solar farm, does count towards the land’s value when the fire service levy is calculated. Pallas said that was just clarifying what was already intended by the law and would not increase taxes.
Often, a clean energy generator leases land from a farmer. The landowner would be charged the levy and Crestias said it would most likely be passed on.
Treasurer Tim Pallas in October.Credit: Joe Armao
She said generators might not be able to recoup those costs. “It could make investors much more nervous about investing in Victoria.”
According to the group’s analysis, Golden Plains Wind Farm would be billed an extra $2 million a year under the fire service levy if the change came into effect – about $10,000 per turbine or 10 times what they currently pay.
The 1.3GW farm – which Crestias said was valued at about $3 billion, greater than the value of the land – will become Australia’s biggest, covering 16,723 hectares.
A government spokesman said the amendment reinforced the original intention of the law, but he stressed that state Labor supported renewable energy growth. The bill was being assessed through the legislative process to ensure it reflected the government’s priorities, he said.
“The Allan Labor government leads the nation in supporting the growth of renewable energy to secure a green energy future,” the spokesman said.
“We assess proposed amendments throughout the legislative process to ensure they reflect the government’s priorities, and that is happening in this case.”
Labor is yet to get the necessary support to pass the bill through the upper house and will need to work with other parties and make amendments to secure enough votes.
The Greens withheld support to push for stronger rental protections and changes to the government’s plans to rebuild 44 public housing towers, while the opposition called on the government to withdraw the bill.
Crestias said there had been no consultation with the clean energy industry before the bill was introduced but the group hoped for a resolution in negotiations with Pallas and Energy Minister Lily D’Ambrosio.
“We know, for example, the treasurer is very keen on making sure that Victoria remains an attractive place to invest in,” Crestias said.
She said the assets should be classified as a public benefit by providing an essential service.
“Clean energy investors understand that they need to pay their fair share of the fire service levy. But the levy must be set at a rate that is reasonable and much more proportionate,” she said.
In 2021, the Supreme Court of Victoria ruled that wind farms at the Ararat Wind Farm were “chattels” rather than “fixtures” and should be excluded from the land valuation under the state’s fire services levy. The finding was upheld on appeal by the Value-General Victoria.
Grattan Institute director of energy Tony Wood said he was not across the details of the amendment, but that he understood the desire to streamline the law. He said $2 million was not a huge imposition on a $3 billion asset, but that it was a strange approach while the state attempts to supercharge investments in renewable energy production.
“It does feel like putting your foot on the accelerator and on the brakes a little bit,” Wood said.
Last month, the High Court found Victoria lacked the constitutional power to tax electric vehicles with a road-user charge. The court found the levy was an excise, which only the Commonwealth has the power to charge under the Constitution.
Pallas said the High Court had reinvented the concept of an excise to include anything that impedes consumption.
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