BENDIGO councillors are warning that a "perfect storm" of economic turmoil is building and that a new sunny-looking outlook is far from the full story.
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They used a meeting on Monday night to say an apparently healthy balance in the council's latest quarterly financial reports hides an increasingly tough operating environment.
"It's starting to highlight that cumulative effect of rate capping, the pandemic, the skills shortage, the low unemployment rate," Cr Margaret O'Rourke said.
"We are really starting to see a perfect storm."
Council officers have warned that a $6.1 million operating surplus currently forecast to July is "largely an accounting result" that masks some of the stresses council finances are now under.
The council would have a $3.4 million deficit if external grants tied to some specific projects are not counted.
Cr Matthew Evans said the council was in "a pretty good position" but councillors would need to be "sharper" with the budget going forward.
"It's worth noting too that the recent floods have had a significant financial impact on the budget," he said.
The council had been hit with costs for flood centre operations, infrastructure rebuilds and other recovery works in badly hit areas like Heathcote, Cr Evans said.
"Building damage is currently estimated to be over $10 million," he said.
Council staff think at least 70 per cent of the money the council is spending on flood recovery can be recouped in grants from other levels of government.
They may not be able to react as easily to inflation given the state government will cap rate rises at 3.5 per cent next financial year - inflation that has at times risen as high as 7.4 per cent in Victoria over the past six months.
Council staff say they are still "working through" the implications of surging inflation.
No councillors put forward concrete proposals to save money when they met on Monday night but Cr Vaughan Williams said it was time to tighten spending.
It should "concentrate only on core-council responsibilities ... over the next few years", he said.
The council is in the midst of early work on next financial year's budget and as the Australian economy bumps its way through more turbulence.
Highly respected Bendigo Bank economist David Robertson told a Be.Bendigo business event we were in a "completely unique environment" thanks to shocks from inflation, energy, geopolitical tensions and the after-effects of pandemic stimuluses.
He does not think Australia will go into recession this year but fears the Reserve Bank will overdo its push to rein in recession by hiking interest rates.
"I will be critical if they go beyond [a rate rise] of 3.6 per cent. I think we only need one more rate hike but I expect they will give us two," Mr Robertson said.
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Tom O'Callaghan
I grew up in Bendigo and I want to tell your stories.
I grew up in Bendigo and I want to tell your stories.
