Council releases tough 2024-25 draft Budget for community feedback

Published on 28 May 2024

Council has endorsed the release of its draft 2024-25 Budget for public exhibition and community feedback.   

Financial pressures are mounting across government, business, and communities. The Victorian local government sector faces challenges that will most likely lead to potential changes to Council’s service offering and capacity to invest in infrastructure. Many councils are consequently focused on far-reaching short-term decisions and long-term financial planning to ensure sustainability for the sector. The cumulative effect of rate-capping below CPI and in Hepburn Shire’s case its relatively small population, inefficiencies arising from administering multiple population centres, and comparatively low rates revenue, all combine to constrain the financial outlook.

Mayor, Cr Brian Hood, said that the draft Budget outlines revenue and expenditure projections for the following financial year, the need for reduced operating expenditure, increased borrowings and a significant trimming of the capital expenditure budget.

“This is the fourth and final year Budget under our 2021-2025 Council Plan and it funds important services like roads, parks, waste and recycling, business support, events, and much more.”

“As we deal with challenging economic times, we need to make tough and responsible decisions. We are managing our service delivery and capital works program in a financially responsible way. The draft budget highlights some opportunities for savings and for capital works investment that is necessarily lower than the expansive program of recent years.”

“In this coming year, it will be necessary for Council to reduce its operational budget by $1.5 million, while striving to minimise the consequent impact on service delivery. We remain committed to ensuring we deliver for our community by completing existing capital projects, investing in the renewal of existing assets and community infrastructure, and delivering services in line with the community’s vision,” said Cr Hood.

Cr Hood said the draft Budget makes the most of the limited funds available to Council. Both inflation and the Victorian Government’s Fair Go Rates Cap continue to severely impact councils.

“Times are tough for many in our community. We understand that. Inflation is hurting not only households, but businesses and all levels of government as costs continue to rise. The consequence of inflation poses significant financial challenges. The cost of materials, operating costs and capital works are increasing at a rate much higher than the rate cap.”

“With the current economic climate burdening all levels of government there has also been a reduction in the opportunity to secure grants, which are a critically important income source for Council.”

Chief Executive Officer Bradley Thomas noted that the financial challenges are not unique to Hepburn Shire and are being felt across many Local Governments.

“Major areas of investment throughout 2023/24 will see the completion or advancement of significant capital projects, including The Mechanics Trentham and Djuwang Baring (Creswick Trails), while the preparation of five Township Structure Plans and the Rural Hepburn strategy will contribute to the long-term economic benefit of the Shire, which we are proud of”.

“Hepburn Shire has been subject to significant costs associated with natural disasters and weather events. Over the last three financial years, we have incurred $15.04 million in expenditure associated with storm recovery works, resulting in a net cost to Council, after State and Federal Government reimbursements, of $4.46 million. This amounts to 21% of our annual rates income,” said Mr Thomas.

Revenue collected through rates and charges, State and Federal Government grants and other sources, is projected to be $40.3 million. Rates will be increased in line with the State Government Rate Cap of 2.75%, well below the current CPI rate of 3.6%.

Council will continue with the delivery of recently adopted and existing strategies in a financially sustainable manner. These include Sustainable Hepburn; Early and Middle Years, Youth and Positive Ageing Strategies; Gender Equity Strategy, and our Arts and Culture Strategy and the Rainbow Action Plan, which is to be considered for adoption shortly.  Support for Dja Dja Wurrung as the Traditional Owners, and diversity and inclusion in our community, remain a priority in all forward plans for Council.

The budget will deliver an $8.5 million capital works program for 2024/2025.  Projects include:

• Road renewal and resealing $2.58 million
• Daylesford Town Hall $1.03 million – funding to finalise roof and electrical replacement to ensure the ongoing protection of this key heritage asset
• Building works of $1.06 million, including the design for Daylesford Community Facilities $0.3 million and a further $100,000 to continue progression of the Glenlyon Recreation Reserve Pavilion
• Recreational and Community facilities including parks and open spaces of $1.5 million, of which $1 million is grant funded.

The draft Budget includes $5.53 million of new borrowings to support the delivery of capital projects and provide upgraded and new infrastructure. This additional debt will keep Council within the low debt ratio used by the Victorian Auditor General and the long-term financial strategy will factor in repayments.

The budget also indicates that a further $4.06 million in permanent savings or increased revenue must be generated in the 2025/26 financial year if Council is to remain sustainable in the long-term.  To illustrate the scale of the necessary changes it should be noted that $4m is the equivalent of 20% of Council’s rates income or 12.5% of its cash operating costs. Over the coming months, Council will prepare and adopt a revised Long Term Financial Plan that will outline a strategy for the sustainability of Hepburn Shire over the next ten years.  Council will engage with the community in July on the Long-Term Financial Plan (10-years) and look to adopt the plan at the September 2024 meeting. Continued collaboration with the community remains essential for:

• Assessing and prioritising our service offerings.
• Determining feasible and affordable levels of expenditure.
• Identifying assets necessary for delivering prioritised services.
• Evaluating surplus assets for potential disposal.
• Adjusting resources to support the delivery of prioritised services.
• Reviewing borrowing levels.
• Reviewing opportunities for additional revenue, including an application for a rate cap variation.

“Although it is necessary to make operational savings from current expenditure levels, we present a responsible and well-measured budget that continues to show investment and support of our community within a challenging financial environment. We will continue to deliver on the final year of the Community Vision and Council Plan and will make strong recommendations via the long-term financial plan to achieve long term sustainability,” said Cr Hood.

Consultation is open until 13 June, and given the financial limitations of Council, will focus on the inclusions in the draft 2024/25 budget, noting consultation on services, revenue and the future financial direction of Council will occur in July as part of the Financial Plan development (long-term financial plan). The draft Budget and feedback form are available at  https://participate.hepburn.vic.gov.au/draft-budget

The motion adopted:

That Council: 

1. Acknowledges the challenging financial environment that is confronting Councils across Victoria in the preparation of 2024-25 budgets, and the impact upon the long-term financial sustainability of Hepburn Shire; 
2. Endorses the release of the draft 2024/2025 Annual Budget as required under Sections 94 and 96 of the Local Government Act 2020; 
3. Includes within the draft 2024/2025 budget $100,000 in funding to resource the further implementation of the Affordable Housing Action Plan and Strategy – A Home in Hepburn Shire, and to offset that funding part deliver the renewal of the Newlyn Kitchen Pavilion Floor over two financial years and defer $100,000 to the 2025/2026 budget;
4. Authorises the Chief Executive Officer to effect any minor administrative changes which may be required to the draft 2024/2025 Annual Budget while public consultation is occurring; 
5. Invites submissions in relation to the draft 2024/2025 Annual Budget via Participate Hepburn, noting submissions close 13 June 2024; 
6. Subject to changes after the consideration of all submissions, the 2024/2025 Annual Budget will be presented for adoption as Council’s budget for the 2024/2025 year in accordance with Section 94 of the Local Government Act 2020 at a Meeting of Council on Tuesday 25 June 2024;  
7. Endorses the schedule of fees as contained in the draft 2024/2025 Annual Budget to commence from 1 July 2024; and 
8. Requests that the Chief Executive Officer works with Councillors to undertake additional Councillor workshops, engage with the community during July and prepare an updated Financial Plan (10-years) for consideration at the September 2024 Council Meeting that addresses the long-term financial sustainability of Council.
9. Acknowledges and thanks officers for work undertaken through a series of Councillor workshops over an extended period and for the assistance in preparing the draft Budget 2024/2025 for Councillor consideration.