At the ordinary meeting earlier this month, Council received and adopted its annual financial statements and performance statement for 2022/23.

The financial statements set out the financial performance, financial position and cash flows for the financial year ending 30 June 2023, while the performance statement includes the results of the prescribed indicators and measures developed by the Victorian Government under its performance reporting framework. The Victorian Auditors Generals Office (VAGO) has given the financial report a clean audit opinion.

Mayor, Cr Brian Hood, said it was clear that Council, like most local governments, is experiencing a challenging financial environment made worse by major storm events over the past two years and steeply rising costs in the economy.

“Three significant storm events throughout the Shire have severely impacted the cash position of Council over the last two financial years.  It is anticipated that a significant percentage of the recovery costs will be reimbursed through government funding but Council is forecasting an unbudgeted $1.4 million shortfall in relief funding when the recovery works are completed,” said Cr Hood. “Most of the recovery works are on our road network and they remain our highest priority. Rate capping also continues to have a significant impact on rate revenue for small rural councils.”

“We will need to closely monitor our financial position and performance over the coming years to ensure that Council is in a financially sustainable position.  We will complete a review of the Long-Term Financial Plan, which is scheduled to be presented to Councillors by the end of the calendar year. The long-term outlook will determine Council’s capacity to undertake major capital works,” he said.

Council reported unrestricted cash of negative $2.6 million as of 30 June 2023, largely due to $4m in storm and flood relief funding not being received by 30 June. Like any organisation, Council needs to retain a buffer of cash holdings to safeguard against unexpected events and for discretionary spending opportunities that may arise.

Even though financial challenges were encountered during the year Council completed the largest capital and major works program to date with expenditure of $17.4 million in 2022/23, in addition to storm recovery measures of $6.4 million.

The financial statements include the sale of The Rex and its impact on the 2022/23 financial position.

“The Hepburn Hub at The Rex project was a legacy project inherited from the previous Council and is under investigation by the Local Government Inspectorate due to probity concerns around the initial purchase,” said Cr Hood.

The building in Daylesford was purchased in 2016 for $6.345 million. The current Council took the decision to cease the project and sell the building in November 2021 after taking into account a number of factors. The total expenditure on the project was $9.382 million.

As reported earlier this year, the building was sold for $3.735 million, in excess of its $3.7m independent valuation, resulting in a cash loss for the project of $5.647 million.

The proceeds from the sale of The Rex were used to repay the $1.5 million loan associated with the purchase, and the remaining balance of $2.1 million was used to create a reserve to assist with funding Birch Ward community facilities and Council staff accommodation.

Council received 100% of the 2023/2024 financial assistance grants from the Federal Government ($6.1 million) in June 2023, much earlier than forecast, consequently inflating Council’s financial position at 30 June 2023. Council remains heavily reliant on grant funding for capital and operating purposes, with 44% of income in 2022/23 coming from that source.

The operating result for 2022/2023 was a deficit of $2.59 million.

“Deficits or surpluses don’t always reflect the true financial performance and cash position of the council. The 2022/2023 results include some one-off items which have had a significant impact on the operating result. An operating surplus of $5.44 million would have been achieved if the impact of storms, The Rex sale and asset write off were not required. Incurring a deficit is reasonable in the short term, but not sustainable long term,” said Cr Hood.

Given the ongoing financial challenges, the impact of storm recovery works, sector wide challenges in recruiting staff, and frequent changes to government policies, it should be acknowledged that considerable work has been completed during the past twelve months.

Chief Executive Officer Bradley Thomas thanked Councillors and the community for their contributions during the 12 months and acknowledged the significant effort by Council’s workforce. Greater details on operational performance during 2022/23 will be provided in the Annual Report to be considered by Council at the October Council Meeting.

“The last 12 months have been some of the hardest for staff, however I’m very proud of the projects we have been able to deliver to completion or substantially progress, and improvements we have made across capital works delivery, community engagement, customer service and service delivery,” said Cr Hood.

Read the financial statements at