Bendigo Council Faces $4.2m Rate Rise Forecast as State Funding Stalls

Bendigo City Council is grappling with a funding squeeze that will force difficult choices about road maintenance, library hours and aged care services over the next three years. The state government's decision to cap local government grants indexation at 2 percent annually-well below inflation running at 4.1 percent-has created a $4.2 million shortfall in council's forward estimates, according to figures presented to councillors at Tuesday's briefing.

The policy change affects 79 councils across Victoria. Bendigo, as a regional centre with ageing infrastructure and a growing population, stands to lose proportionally more than wealthier metropolitan councils. The annual general purpose grants from the state, which totalled $18.6 million in the 2024-25 financial year, will grow at 2 percent next year under the new indexation arrangement. This means the council receives $379,200 less than it would have under the previous CPI-linked formula.

What This Means for Your Rates and Services

Bendigo residents should expect rate increases of between 7 and 9 percent in the coming budget, according to local government policy analysts. That's roughly $140 extra per year on the median residential property valued at $650,000. The state government says the policy will encourage councils to find efficiencies and reduce operating costs. In practice, Bendigo's deputy mayor flagged last month that the council is reviewing library operating hours in the central precinct and deferring some footpath resurfacing on residential streets outside the CBD.

The timing matters. Bendigo's infrastructure backlog already sits at $187 million according to the council's 2023 asset management report. Roads in suburbs like Golden Square and Kangaroo Flat are deteriorating faster than maintenance budgets can repair them. The funding squeeze now means some of this deterioration will accelerate. Residents on properties served by Bendigo Health's aged care services may also notice changes; the council's community care contracts have been flagged for review.

The Broader Picture for Regional Victoria

Victoria's local government sector absorbed similar indexation changes in 2015 under the previous government, and the Local Government Association now estimates councils statewide face a cumulative $220 million funding gap over four years. Bendigo's share of that gap reflects its status as a growth region. The city's population is expected to grow by 12,000 residents between now and 2036, according to the Bendigo Planning Scheme. That growth requires more services-more library usage, more aged care demand, more street maintenance-at precisely the moment funding is tightening.

Council has begun modelling three scenarios for the 2026-27 budget. The first assumes the indexation cap stays in place and seeks efficiency gains and rate increases. The second explores external funding from grant programs and philanthropic sources. The third considers deferring non-essential capital works. A final decision is expected in August, when councillors vote on the draft budget.

Residents who want to have their say can make written submissions to the council until August 18. The council's community consultation process runs through August, with two public information sessions planned for the main library on August 12 and 15.