‘Difficult decisions’: City of Melbourne reveals rate rise, spending cuts in draft budget

The City of Melbourne has revealed rates will be raised and spending cut to get its budget back into the black for the first time in five years.

Rates will be hiked and spending slashed as the City of Melbourne gets its budget back in the black for the first time in five years, with outgoing Lord Mayor Sally Capp conceding “difficult decisions” had to be made.

The $781m draft budget was announced at Town Hall on Tuesday, forecasting a “modest surplus” of $101,000 one year early, with surpluses set to continue until 2028.

Property owners will fork out more in rates next year, as the council passes on the highest increase permitted under the 2.75 per cent rate cap to help it rake in a projected $390m.

But due to an uptick in users, public waste charges will be cut between $15 and $53.

Revenue from parking fees is also set to jump 11 per cent and drag in more than $54m, likely due to recent changes, such as the scrapping of free parking on Sunday.

Lord Mayor Sally Capp announced the $781m draft budget on Tuesday.

Handing down her seventh and final budget, Ms Capp said she was “proud” to be delivering a surplus before she departs Town Hall in June.

“The draft budget encapsulates $781m in spending next year, but this budget also demonstrates that we are responsible financial managers,” she said.

“To achieve surplus in the draft budget for next year, the difficult decisions really have been focused around cutting spending.

“We’ve cut $69m in spending … from this year’s budget to our draft budget.”

She said the most of the cuts were about “discipline”, such as the reduction of $11.5m in operating expenses and the “rephasing” of funding for major projects, including her pet project, the Greenline.

“You can imagine how difficult it is for me, certainly, to consider a rephasing for some of those projects, but they are the right decisions to make to get us back to surplus budgets,” she said.

“The great thing about returning to surplus budgets is that it gives future councils capacity to continue investing in what counts here in Melbourne.”

The draft budget is open for community consultation until June 3. Picture: David Crosling

Under the 2024-25 draft budget, the City of Melbourne is set to splash $224m on infrastructure next year, including $51.9m for the Queen Victoria Market renewal.

The Greenline, which aims to create 4km of connected walkways and parks along the north bank of the Yarra River by 2030, will receive $22.5m for the first stage at Birrarung Marr, with more than half of the cash ($12.5m) to be provided by the federal government.

But the council is yet to allocate funding for the rest of the project, which has been forecast to cost as much as $316m.

With construction underway, Ms Capp defended the rephasing of the project, saying she did not expect it to affect the completion date, only “when the spend will happen”.

“I’m absolutely confident with the amount of effort that has gone into an award-winning master plan and the funding and partnership strategy that … Greenline will be delivered,” she said.

According to the draft budget, 14 other projects have also not been allocated funding “for delivery” over the next four years, including the Melbourne City Baths redevelopment, the Normanby Road expansion, the transformation of “little streets” and Power Melbourne (beyond the pilot phase).

But the delayed redevelopment of the Kensington Community Aquatic Recreation Centre will receive $23.1m, which should ensure its completion next year.

The Greenline will receive $22.5m next year for the first stage at Birrarung Marr. Picture: City of Melbourne

More than $60m will be spent on making the municipality cleaner and safer, including almost $3m for graffiti removal and $9.7m for safety infrastructure, such as lighting upgrades and security monitoring.

Another $16m has been set side for business initiatives, $7.8m for new parks and reserves, $5m for streetscape improvements and $4m for cycling infrastructure.

The draft budget also confirmed spending of $29.5m for more “open space” across the city, $30m for grassroots sport and the expansion of the business concierge service, as revealed by the Herald Sun.

Spending on consultants will drop from $13.4m to $10.1m, with more work to be brought in-house.

But as a result, the number of Town Hall staff will increase to 1517, costing the council an extra 3.6 per cent.

Finance, governance and risk portfolio lead and councillor Philip Le Liu said a surplus will give the council “long-term financial sustainability”.

“We’ve cleared an underlying deficit of $25.6m by lowering operational costs, re-phasing projects, improving efficiency and doing my work in-house,” he said.

The draft budget is open for community consultation until June 3.