Council received the Annual Financial Statements and the Annual Report at its last meeting.

The reports show that Hepburn Shire continues to face significant financial challenges into the future. But Council has begun to face up to the need to balance its budget. In doing so it has implemented additional efficiencies of $2.53 million as part of the 2025/26 budget.

The deficit of $189,000 for 2024/25 was a significant improvement on recent years. In 2023/24 the annual deficit was a whopping $9.9 million. But the improvement has to be taken with a grain of salt. It mainly results from changes to the timing of Commonwealth Grants rather than any massive improvement to revenue and expenditure.

The underlying deficit of $2.6 million, which adjusts for timing, one off funding and capital grants is a better indicator of how Council is tracking. This shows there is still work to do for Council finances to be sustainable in the medium term.

While revenue increased by $6 million in the last year that was largely the result of changes to the timing of Commonwealth grants. Rates and charges increased by $1.1 million or about 4.4 percent, in line with the rate cap and there were some increases in waste charges. User fees and charges as well as statutory fees remained relatively constant.

In line with savings that Council has implemented, employee costs were down by nearly $1 million and there were significant reductions in spending on materials and consultancies.

Council has also reduced capital spending to a more sustainable level. Last year $10.8 million was spent on capital works like roads, parks and buildings, down by $6 million on the previous year.

It’s important to put these results in context. Hepburn is a small rural shire with widely distributed population centres. Last financial year, Hepburn Shire had total revenue and expenditure of $45 million. So the underlying deficit was around five percent of the total budget, which is manageable in the short term. But it is important that Council continues to look for ways to increase its revenue and reduce costs to reduce the deficit.

Council relies heavily on the support of State and Federal Government grant funding in addition to rates and charges, particularly for major projects such as the redevelopment of the Town Hall. If the underlying deficit is to be eliminated, further savings or additional revenue will have to be found, particularly as the cost of labour and materials continues to grow.

Inevitably that means Council will have to consider further targetted reductions in services or additional user charges.