Council delivers record budget, but predicted surplus pushed back

Lord Mayor Sally Capp said the rising cost of living was “central” to this year’s budget, as the City of Melbourne remained in the red.

The City of Melbourne has drafted a record $850.7 million budget for the 2023-24 financial year, despite posting an increased deficit and pushing back a predicted return to surplus by two years.

As the council’s deficit grows from $11 million to $17 million, locals will pay more on their rates from July — in line with a 3.5 per cent cap imposed by the Victorian Government — however pensioners can receive a discount of up to $253.

Despite being in a “strong position to deliver a surplus in 2023-24” 12 months ago, and similarly predicting a return to surplus in the year prior, the council was again forced to shelve any “back in black” celebrations.

The total spend was its highest ever, however announcements promoting a “record budget” (as has done in both previous budgets) were also shelved, perhaps reflective of the more sombre economic times.

Lord Mayor Sally Capp said that the council was “very alive to” rising mortgages, rents and bills that each household faced, which were “a central part of discussions” while putting together the budget.

“Please do know we are very sensitive to how difficult the environment is out there, and it’s been central to our thinking on the budget,” Cr Capp said at the May 16 Future Melbourne Committee meeting — the same day it put out its draft budget.

Councillors noted that with inflation at around seven to eight per cent and a rise in construction costs as high as 20 per cent, capping of rate increases at just 3.5 per cent made a return to surplus unachievable without compromising local services.

“It is a great effort by the team to be so mindful and prudent,” Cr Capp said.

We have really done our darnedest to be able to continue to deliver on services and projects in the current environment of high inflation and higher construction costs.

A large percentage of council revenue is raised through rates (in this budget, $377 million), however the second-highest stream is via fees and charges ($134 million) which was set to increase by almost $14 million in 2023-24.

This was due in part to greater activity and visitation across the municipality but also an increase in fees, notably the move to charge drivers for on-street parking in the CBD and parts of Southbank until 10pm (rather than 8.30pm) and on Sundays, and the doubling of outdoor dining fees.

From July, hospitality traders in the “central city” – which includes Southbank Promenade and Riverside Quay – will be forced to pay $556 per sqm each year for an outdoor dining parklet, up from $278 last year.

Traders outside the central city will pay $128 per sqm, up from $64.

Headlining the budget was a $247.5 million infrastructure spend, which included a further $60 million for the renewal of Queen Victoria Market, $17 million for the “city shaping” Greenline project along the Yarra River’s northbank, and a further $28 million for the redevelopment of the Kensington Community Aquatic and Recreation Centre.

The council will spend $16.5 million to secure new open space across the municipality, including a pocket park at Miles and Dodds Street Reserve in Southbank.

It included $4 million towards its much-publicised bike lane rollout including new protected lanes along the entire stretch of Flinders St, a project set to benefit cyclists travelling across the Yarra River from Southbank into the CBD.

Flagged as its most challenging bike lane project yet, it has committed to delivering the project by July next year, however that timeline was dependent on state government approvals.

The Lord Mayor said there would be “extensive, comprehensive consultation” on the Flinders St designs, which were due to be finalised by June 30.

The overall 2023-24 budget invested heavily in events ($28.2 million), libraries ($13.4 million), greening and sustainability, business support and creative industries, which includes $2 million for new public art projects.

The events spend included around $6 million for Christmas festivities and $5 million each for Moomba and New Year’s Eve, the latter of which attracted almost half a million people earlier this year, generating $18.7 million in economic activity according to the council.

As it has done post-COVID, the council continued to spend big on cleaning the city’s streets, setting aside an additional $1.5 million to bolster rubbish removal across Southbank, the CBD and Docklands.

Deputy Lord Mayor Nicholas Reece said the “strains of recent years” were apparent in the city’s finances, which had seen it produce a “disciplined” budget.

“I think it’s a budget that’s right for the times. Somebody said to me today ‘oh, this budget seems a little bit business as usual’. Well, I’ll take that as a compliment,” Cr Reece said.

“Like everybody else in Australia we’re not immune to what is going on in the broader economy.”

Cr Rohan Leppert, one of just two serving councillors to have occupied a spot in the Town Hall chambers for more than a decade, said the tough economic times had created a sharper focus.

“We have put more care into this budget than any before — not that we didn’t put care in before, of course — but there’s no shying away from the stark realities of the financial constraints that all local government finds itself in at this point,” he said.

However, the Greens councillor said he was “particularly concerned” about whether the council had enough staff to service a booming population in coming years.

With Melbourne having overtaken Sydney to become Australia’s largest city by population, the council was set to increase the number of average full-time equivalent staff next year by 44 (from 1478 to 1522), however in the following three years, from 2024-2027, it was projected to increase staff numbers by just 11.

Cr Leppert said this must be “constantly reviewed” to ensure the council was “not restricting the capacity of the organisation to deliver on essential services for a fast-growing municipality”.

Community feedback on the draft budget can be provided via Participate Melbourne until midnight on Thursday, June 8, with the final budget expected to be adopted by councillors on June 27. •

To have your say, visit participate.melbourne.vic.gov.au