Soaring coastal erosion costs hit Bass Coast Shire bottom line

A MAJOR legislative hurdle has been cleared ahead of the strict October 31 deadline for the public release of Bass Coast Shire’s annual financial results. Draft financial and performance statements were approved at a specially convened council meeting revealing an underlying deficit of $19.2 million or 17.7per cent.

Key drivers behind a budget variance of $14.2 million included materials and services expenditure $5.2 million over budget, driven by an unbudgeted write-off for works-in-progress including coastal erosion programs and landfill rehabilitation.

While the headline surplus was $6.2 million better than expected, council's adjusted underlying result fell to a 17.7% deficit ($19.2 million), worsening significantly from the projected 9.5% deficit. This drop was driven by non-cash write-offs and a $2.7 million net loss on asset disposals from renewing ageing road networks.

Employee costs outpaced the budget due to redundancies, casual labour for income-generating events, and accrued leave provisions. Additionally, asset revaluations pushed depreciation $1.3 million above budget.

To fund long-term assets, council spent $33.3 million on capital works, outstripping its $31.5 million budget. This included $19.4 million dedicated to renewing and upgrading existing infrastructure. Cash and investments dipped slightly from $60.8 million to $57.1 million, impacted by forward-funding the landfill rehabilitation works and decreasing net borrowings by $5.1 million down to $24.2 million through planned debt repayments.

Council’s loans-and-borrowings-to-rates ratio dropped from 37.5 per cent to 29.7 per cent and debt repayment ratios fell from 18.5 to 10 per cent. However, the council’s adjusted underlying deficit climbed to 17.5%.

Officials attributed the spike in the underlying deficit to increased depreciation expenses, written-off capital expenditure, asset disposals, and the timing of rehabilitation payments for the Wonthaggi landfill project.

During the council meeting Cr Temby moved to adopt the financial statements, noting they had been reviewed by the Audit and Risk Committee and the Victorian Auditor-General's Office (VAGO).

While praising council's overall financial management and significant reduction in debt, Cr Temby raised concerns regarding long-term climate funding, with a warning that council spending on coastal erosion and inundation projects risked setting an unsustainable precedent. "It creates a false expectation, a sense of entitlement precedent that cannot be funded at local, state, or federal levels," Cr Temby said.

While noting that council’s finances remained highly constrained due to strict rate caps and dwindling financial support from both state and federal governments, Cr Temby praised the draft report for demonstrating sound financial management.

Under Sections 98(2) and 99(2) of the Local Government Act 2020, Victorian municipalities are legally required to endorse their draft accounts before submitting them for formal audit. This preliminary sign-off allows the books to be sent to the Victorian Auditor-General’s Office (VAGO) for final review.

Working closely with independent council auditors, the Audit and Risk Committee of council provided its full backing for the figures. With the vast majority of the audit fieldwork already completed, council confirmed that no material changes or unexpected adjustments were anticipated before the final documents were presented to the community later this month.

Although the specially convened council meeting was streamed online the public gallery remained closed. Bass Coast Council has been contacted for comment.