City of Melbourne’s draft budget raises more questions than confidence

The City of Melbourne’s draft 2025–26 budget paints a picture of cautious optimism underpinned by fiscal discipline, but behind the headlines of surpluses and cost-of-living relief lies some mixed messaging.

Unveiled on May 13, the $732.4 million budget – the first of the new council term – delivers a modest surplus of $150,000 and aims to put the city on a path toward eliminating debt within seven years.

This is a budget that seeks to aggressively pay down debt, proposing a whopping $135 million payment in 2026-27, which represents a major shift from the slower repayment program previously forecast.

Much of this figure is understood to be attributed to the proceeds from the Gurrowa Place deal with Lendlease at Queen Victoria Market, however this isn’t outlined in the budget.

New finance chair Cr Owen Guest has led the charge, claiming to have found $15 million in savings to reverse a forecast deficit, saying the budget “marks the restoration of respect and confidence in the way our city is managed.”

On revenue, the budget suggests a downturn: income is projected to fall by $28 million compared with last year, dipping from $643.9 million to $616 million. However, this is the product of no property sales forecast in 2025-26 and, supported by the recent $55 million sale of its “Parkade” Little Collins St car park, revenue is slightly up.

And while the sale of the council’s majority stake in Citywide – its commercial infrastructure services company – has been the subject of quiet speculation for months, the budget makes no mention of it whatsoever.

The announcement by the Australian Competition and Consumer Commission (ACCC) on May 15 that it would not oppose Cleanaway’s acquisition of Citywide will come as relief to the council, which can now bank on a further $110 million from the sale.

A council spokesperson has since confirmed that the sale of the Citywide waste division will not be included in the final 2025–26 budget, as there were still several conditions to work through.

One of the most politically sensitive areas – rates – remains a contentious issue in this budget. While the Lord Mayor has promoted a “freeze”, the budget actually lifts rates by three per cent in line with the state government’s cap, only to immediately rebate that increase back to ratepayers.

The real effect is that the council preserves its capacity to increase rates again next year from a higher base – a tactic used before the 2020 election, and one that risks repeating a “double hit” in future.

A forecast loss of $8.46 million in supplementary rates and rate adjustments – an unprecedented figure sharply at odds with previous years, which typically see a modest gain – is the result of the rebate, according to a council spokesperson.

While the budget already appears to factor in restricted rates revenue as part of its “general rates” income, the council explained the loss comprised additional supplementary income for rates in 2024–25 (from increasing property values and number of properties), less the $10.3 million rebate to all ratepayers.

Meanwhile, the waste charge – subject to a three per cent discount – remains based on a crude two-tier system introduced in 2022, with no sign of the long-promised review to make it fairer. Top-tier property owners pay $320, while others pay $140.

When it comes to spending, the budget promotes a $154 million capital works program, but much of this year’s rhetoric fails to match the numbers. Projects touted in media releases – such as major park transformations in Southbank or expanded green links across the city – are not accounted for in the four-year expenditure profile other than to progress design work.

The Lord Mayor’s “garden city” program lacks any funding beyond year one, and as well reported, the landmark Greenline project only receives funds to finish the Birrarung Marr section, with no further allocations for other segments.

Projects like Macaulay Terraces (aka the “drainage land”) and the Moonee Ponds Creek linear park (between Arden St and Macaulay Rd) have fallen off the radar entirely.

Even the headline new community infrastructure project – the $40 million North Melbourne Community Centre – has been quietly delayed. While last year’s budget anticipated major spending for the upcoming financial year, this year’s budget pushes most of that spend out to 2028–29, with only $954,000 earmarked for 2025–26.

Many of the other open space and community infrastructure priorities that were pledged during Team Reece’s 2024 election campaign – including 28 new parks and linear green links – are nowhere to be seen over the forward estimates.

Only one – the refurbishment of Boyd Community Hub – of the 15 major “design-phase” projects listed in last year’s budget has progressed to construction. All others, including Power Melbourne, Melbourne City Baths redevelopment, and Elizabeth St and City North urban realm improvements, appear to have been quietly shelved.

The cycle infrastructure program has also taken a hit. Last year’s $13 million four-year commitment has been quietly cut to $9 million, and much of that spend is dedicated to reconfiguring existing lanes – not building new ones.

Lord Mayor Nick Reece had pledged to “maintain investment in bike lanes over the next four years at the same level as the previous term of council,” a promise now seemingly broken amid increasing pressure to balance the books.

For the first time, there is no Annual Plan or meaningful project list accompanying the budget. With the new four-year Council Plan not due until October, the absence of detail on what the council will deliver between July and October creates a worrying lack of accountability.

Instead, page 30 of this year’s budget lists a series of “key activities” that appear more focused on branding Team Reece election commitments than aligning with existing policy frameworks.

But the Lord Mayor is to be commended for securing $3.5 million from the state government for the expansion of the Safe City Camera Network. The council will add $2.1 million of its own to help activate more than 100 new CCTV cameras.

Then there’s the $2 million allocated to expanding “The Reece Police” – the Lord Mayor’s on-street security patrol initiative, with around 10 new “community safety officers” expected to be deployed.

A further $1 million has been included to light up some of the city’s busiest areas, including Hardware Lane and Bourke Hill – and there’s another significant investment - $59.8 million – towards the war on graffiti.

For households, the budget also delivers some cost-of-living relief – on-street parking fees remain frozen for the eighth consecutive year, and residents can look forward to $2 pool entry, free fitness classes, 600 free swimming lessons this summer and free pet registration.

The Lord Mayor declared the budget “delivers on our promise of a better Melbourne,” while Cr Guest maintains his priority is to “invest ratepayers’ money wisely” and improve trust. But for a council already under scrutiny for its past fiscal manoeuvres, this budget may do little to quieten critics.

Ultimately, while the draft budget offers short-term fiscal comfort and some positive investments, its lack of detail might leave locals with more questions than answers.

Public consultation on the draft budget is open until June 2. •