Council records modest surplus amid claims of cautious spending

The City of Melbourne has reported a $589,000 underlying surplus for the 2024–25 financial year, its first since 2019, marking what the council has described as a “turnaround story” following consecutive deficits during and after the COVID-19 period.

The result, adopted as part of the council’s annual financial report considered at its September 30 meeting, comes after a forecast surplus of just $101,000. The outcome has been hailed by the administration as proof of renewed financial discipline, though some insiders say the surplus is modest in real terms and was achieved largely through withheld spending and delayed projects.

Finance portfolio lead Cr Owen Guest said the turnaround reflected a renewed focus on budgetary restraint and long-term sustainability.

“This hasn’t been easy, but change was needed as the over-expenditure of the previous five years would have placed our financial sustainability in jeopardy.”

Lord Mayor Nick Reece described the result as a milestone in Melbourne’s post-pandemic recovery.

“This is a significant budget milestone for Melbourne as we move on from the deficits of the COVID era,” Cr Reece said. “It marks a new era of prudent financial management, putting us on track to pay down our debt and remain financially sustainable.”

However, some observers have questioned whether the result represents a genuine financial improvement or a matter of optics. The $589,000 surplus, while technically a positive outcome, equates to less than 0.1 per cent of the council’s annual operating budget – a figure one source described as “a rounding error.”

They suggested the council reached the surplus largely by underspending on community programs and tightening expenditure in the final months of the financial year to offset shortfalls in fee and fine revenue. While this approach ensured the books closed in the black, it may have come at the expense of service delivery.

Concerns have also been raised about the delays in the council’s quarterly budget reporting, noting that the June quarter report remains overdue, despite legal requirements under the Local Government Act for such updates to be presented “as soon as practicable” after each quarter ends. The delay makes it difficult for councillors and the public to properly scrutinise how the surplus was achieved.

The annual report, due for release later this month, is expected to provide a fuller account of which projects were delivered, delayed or under-spent on across the financial year. •