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 the 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 CBD parking until 10pm (rather than 8.30pm) and on Sundays, and the doubling of outdoor dining fees.

From July, Docklands hospitality businesses will pay $128, up from $64, per sqm each year for an outdoor dining parklet.

The hike was still well below that imposed on nearby CBD hospitality traders, who will now pay $556 per sqm (up from $278) each year.

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 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 from Docklands 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.

Prior to the addressing the draft budget at the May 16 meeting held at Community Hub at The Dock, a Docklands neighbourhood update from council staff also revealed that 10 planter boxes would be relocated to Harbour Esplanade and NewQuay Promenade by the end of June.

As part of “beautification works” a further 10 planter boxes would be installed by the end of 2023, while plans were in place to reinstate the Light Buoys public art installation at Yarra’s Edge.

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 budget notably included $1.6 million on Docklands’ Firelight Festival, up from $1.1 million in 2022-23.

It also 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 the CBD, Docklands and Southbank.

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 that staff numbers would increase 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 •