South Gippsland Shire budget constrained by economic climate

COMMUNITY members who got on the front foot putting in suggestions ahead of council planning for the South Gippsland Shire Council budget may be disappointed their ideas don’t feature in the draft 2026/27 budget but that doesn’t mean their projects have been dismissed.

“Some of the bigger items were capital works programs that the community highlighted, facilities in recreation reserves and that sort of thing, and they’re still documented as future projects,” council’s executive director of strategy and integrity Tony Peterson said.

“It’s just at the moment we don’t have the money to spend on them,” he said of the need to put some initiatives on hold while council ensures it can continue to provide services the community requires and wants during the current period of price escalation.

While the rising cost of fuel due to conflict in the Middle East is in the spotlight, the impact is far more extensive.

“It’s not just our fuel costs; it’s all the works that involve bituminous products - road resealing, the bitumen, the heavy machinery to do the work - so, we’re anticipating some of those contracts will increase and we’ve got to be responsible in having money there to accommodate that sort of increase,” Mr Peterson said.

Despite being forced by economic circumstances to take a more conservative approach to the budget than initially intended, council highlighted the “significant but financially manageable $24 million capital works program to progress important renewal projects”.

“The budget also supports the (creation) of a new Economic and Visitor Economy Strategy, to be delivered in-house to achieve cost savings, and continues key strategic work including the Sustainable Building Asset Management program and the Aquatic Strategy.”

During Wednesday’s council meeting, a couple of councillors addressed calls from some community members to freeze council rates for three years rather than increasing them each year within the applicable state government rate cap.

“No one’s ever said they want less services,” Cr Scott Rae said, noting the cost of delivering council services outstrips the rate cap.

“The reality is every year council does more with less,” he said.

Cr Rae remarked on the ability of councillors and council staff to adapt to current world circumstances, reworking the draft budget as required.

“We’ve opted to pare back the nice ‘to haves’ and prioritise council’s core services,” Cr Rae said.

He touched on “myths that council has all this money stashed”.

“Reserves are earmarked for specific purposes and don’t represent pools of spare cash,” Cr Rae said, noting the importance of council taking a responsible approach, keeping money aside for storms and other unforeseen circumstances.

“The only way to freeze rates would be to cut essential services and projects,” Cr Rae said.

Council’s manager of financial strategy Taryn MacFarlane elaborated on the need to maintain reserves, pointing out frequent storms in the region and the vast expenses that can entail.

“It’s prudent financial management; if we just spend it all, there’s nothing to fall back on and we will then be calling on borrowings, getting ourselves into debt,” Ms MacFarlane said, adding that South Gippsland Shire Council is in the privileged position of not having a high debt level.

Mr Peterson said not every storm event triggered emergency grant funding.

Even when such funding is available, it is not a speedy process and funds are increasingly challenging to obtain given the many storm events and other disasters around Australia.

Council also needs to ensure it is in a position to make co-contributions in support of grant funding.

“The aim is to keep operational money so we can continue business as usual,” Mr Peterson said.

He said with the rate cap generally below the CPI, and with the rapid rise in construction costs, council had continued to identify efficiency improvements in delivering capital works but was at the point it could not make much more progress on that front.

“So, it means if we don’t increase rates we’re going backwards and service delivery will fall away,” Mr Peterson said, elaborating that council would then have to assess what services it is legislated to provide against other services that are just nice to have.

With council highly reliant on grants and rates income, not having the range of fees and fines to draw on that metropolitan councils have at their disposal, the prospect of a rates freeze seems remote indeed.

Community members are encouraged to provide feedback on the draft 2026/27 annual budget by visiting yoursay.southgippsland.vic.gov.au where they can view the budget and complete the survey, with the feedback period closing on Sunday May 3.