Draft Budget 2023-24

We consider our annual result as an unallocated cash surplus (or deficit). This is useful as local government financial reporting includes items that can make it difficult to understand Council’s underlying performance such as contributions and grant funding for once-off project funding.

A $625,000 unallocated cash surplus is predicted in the draft budget. It also forecasts a $12 million comprehensive income statement deficit, driven by a planned transition of assets to the Great Ocean Road Coasts and Parks Authority.

Achieving an unallocated cash surplus is becoming increasingly difficult for Council under Victorian Government rate capping. We expect our end of year result in 2022-23 will be favourable driven by higher returns of interest on investments than expected.

The declining results in the 2023-24 to 2026-27 years are largely driven by Council’s increasing investment in renewing our assets, essentially catching up the renewal backlog. There are additional costs incurred in a Council election year in 2024 and start-up costs for the Surf Coast Aquatic and Health Centre in 2025-26 prior to opening the following year.

Council welcomes feedback on the budget during the submission period, which is open until 10am on Monday 22 May.

If you plan to request a project or activity to be funded in your budget submission, please first see if our successful community project development program or our grants program can assist. The grants program has increased by a further $30,000 in this budget to empower communities by helping deliver their projects.

Request for additional funding via the budget process are not easily accommodated as it most likely would require a reduction in expenditure in another area. We hear regularly from community members that any reduction in service levels is often not supported and therefore changes to the draft budget can be a challenge.

Any reduction to this year’s annual result which predicts a surplus will have ongoing impacts to Council’s long term financial position and would require very careful consideration.

The budget includes a proposed rate increase of 3.5% in line with the Victorian Government rate cap. This is well below inflation levels which have risen steeply over recent years, reaching 7.8% in the December 2022 quarter. 

This does not mean every property will experience a 3.5% increase. Each property in the Surf Coast Shire is revalued every year by independent professional valuers.

The annual revaluation of each property does not result in a net gain or loss of revenue to Council, it redistributes the rates burden according to updated property values. Movements in property values can affect the rate increase for individual ratepayers however across the shire, the average rate increase will be 3.5% - well below current inflation levels.

We understand that many residents are experiencing financial pressures so if you are, please reach out to us as we have rates payment plans available to support you. Our teams are ready to help people access these payment supports.

Visit our Help with payment web page for more information. You can also contact Council’s Revenue department on 5261 0600 to have a confidential discussion about alternative payments.

Council’s waste charge covers the costs of waste service delivery, waste infrastructure, administration costs and Victorian Government charges. It is excluded from the rate cap.

The urban garbage collection charge is budgeted to increase by $36 to $491 and the rural garbage collection to increase by $39 to $427. The rural garbage charge is being aligned to the urban garbage over the next three years, given delivery costs and services are on par.

We acknowledge this is a significant increase. It can be attributed to external waste collection and disposal costs, which are increasing by up to 8 per cent, and the Victorian Government EPA waste levy (which has been increasing faster than inflation in recent years). These cost increases are outside of Council’s control and influence.

Managing the landfill and future landfill rehabilitation have also been considered in setting these charges. Major waste projects have faced higher costs like most infrastructure projects across the country. Council simply cannot absorb these costs and meet its obligations to manage waste in the coming years.

While the volume of the food and garden organics collection reduces the amount of landfilled waste, it has contributed to increased costs in providing this service. We appreciate the way the community has embraced the four-bin collection system, to play their part in reducing waste to landfill and working towards a circular economy.

The Surf Coast Shire was one of six municipalities in Victoria to first introduce the four-bin collection. The Victorian Government since announced that the four-bin stream would be rolled out statewide in an initiative that will help divert 80 per cent of waste from landfill by 2030.

It is important to note that while some assets could be renewed now based on their condition, they remain safe and useful but we’ll time their renewal in future years based on condition

Council provides more than 100 services to the local community, and maintains over $1 billion worth of community assets to support both the local population and the 2.5 million people who visit the area annually.

The introduction of the Victorian Government’s Fair Go Rates System in 2015 has significantly reduced the ability of councils to respond to cost pressures by increasing rate revenue. This means that funding the renewal of assets - whether it’s roads, drains, pathways or recreation - in the year that they are first due would impact our ability to fund other services, projects and initiatives in that year.

With a large portion of Council’s assets ageing, we have started proactively allocating more funds to asset renewal each year, to try and renew assets when they fall due. Current renewal modelling shows our backlog will continue to grow until 2027-28 as assets due for renewal exceed the annual allocation. The backlog will start to reduce from 2028-29 as a result of the annual allocation increases.

Given the major cost of the Winchelsea Pool renewal (an $8.5 million project), we need to press pause on renewing a number of our other ageing assets in 2023-24.

As described earlier, they remain safe and useful but we’ll time their renewal in future years based on condition.

Torquay has the largest population of any township in the shire.

Surf Coast Shire has two townships designated for growth – Torquay and Winchelsea. Torquay’s next designated growth area is Messmate Road, while Winchelsea is planning for a population of 10,000 by 2050. We’re part of a bigger picture, where growth in these areas supports national and statewide population increases.

For our growing communities, there is a need and an expectation for us to deliver core services and infrastructure. State and federal governments have a role to play, whether it’s helping fund large infrastructure projects or expanding services such as healthcare and education. However councils are largely responsible for delivering essential infrastructure such as roads, drainage and streetscapes, as well as places like parks and sporting facilities. When built, we have to continue to maintain these assets which places a lot of pressure on our resources and finances.

In places like Torquay and Winchelsea, we have funding programs where development contributes revenue for community infrastructure. This investment is obligated to be spent in these communities.

We recognise that in areas where population is static, the community also has expectations and aspirations. We want to maintain existing assets to the standard residents expect, but rising construction costs are constraining our capacity to tackle a wide variety of projects.

We also time capital projects to funding opportunities, such as state and federal government election cycles. It’s what we’ve done with the Surf Coast Aquatic and Health Centre, which will service community members from across the shire. And this is the approach we are taking with the Deans Marsh Community Hall and Cottage, completing the necessary strategic work so we can advocate for external funding to help deliver this community hub in a future budget.

Council has three business reform programs (Business Improvement, Business Case Investment and Digital Transformation) to improve efficiency and service, and to generate permanent savings that contribute to our long term financial sustainability.

Council has incorporated an additional $327,000 of ongoing savings from the program into the 2023-24 budget. These savings initiatives include technology and information licenses/software savings ($119,000), better utilisation of internal carpentry skills for building maintenance ($60,000), funding benefit from free kinder ($54,000), and investment in hybrid fleet reducing the escalation in fuel costs ($46,000).

We have maintained a sustainable long-term financial position over the next ten-year horizon by prioritising allocations to commitments, services and strategic projects and initiatives that align with delivery of the 2021-2025 Council Plan.