Geelong "can't afford" to provide financial support for the 2026 Commonwealth Games as the city struggles to contain a $150 million budget blowout, the council's finances chair has warned.
The City of Greater Geelong's financial pressures have also prompted concerns the state government may limit the organisation's involvement in the games if it doesn't find a way to deliver on funding expectations for the major event.
Victoria's second-largest city is scheduled to host the closing ceremony and nine sports during the 2026 games, with the state government having committed up to $292 million to build local infrastructure for the event.
But the city's finance portfolio chair Anthony Aitken on Tuesday said its budget had "blown out to a multimillion-dollar deficit", which is set to be exacerbated by up to $150 million in cost increases for its existing major projects.
"All of this is actually starting to occur before we even consider our biggest financial risk which we're facing, which is how do we pay and contribute towards the Commonwealth Games in 2026," Cr Aitken said.
"Council wholeheartedly supports the delivery of the games in regional Victoria, because this is a once-in-a-lifetime opportunity, but the reality is that our latest financial results indicate that we can't afford it.
"When you see our financial figures as released to the end of December there is no fat or financial capacity to be able to contribute towards the games."
Cr Aitken said the city would need direct support to find funding for the games, including possible state or federal government funding, the relaxation of the city's borrowing limit and the ability to increase rates charges above the current cap.
"[To ensure] that the Commonwealth Games is successful and don't financially ruin a council, an exemption from the rate cap is one obvious solution," he said.
When asked if the state government's expected funding contribution from the City of Greater Geelong (CoGG) was about $50 million, Cr Aitken said "and more possibly".
Concern Geelong council could be frozen out of games
One council source, who asked to remain anonymous, said there was a concern the state government would limit the city's involvement in the games if it was unable to provide enough financial support.
"There's been some indication given to the city as to how much the expectation may be, which of course hasn't been budgeted for. So it's going to create real issues," they said.
Councillor Bruce Harwood said the city's budget had been hit by an "unprecedented increase in costs of construction materials".
"That's put us behind our previous commitments let alone our future commitments," Cr Harwood said.
"If we're unable to meet our financial commitment to the Commonwealth Games it should not necessarily be to the detriment of the community overall."
The city's financial concerns are expected to impact projected surpluses of between $1.3 million and $3.3 million it had budgeted for the next three financial years, with a fresh financial report released in February showing the city recorded a deficit of $8.4 million at the end of 2022.
Concerns around being frozen out of involvement in the games partly stem from a scathing letter sent to the city by five state Labor MPs in June, which raised a "growing concern and lack of confidence" in the city's ability to deliver key state-funded projects.
"Timely resolution of these matters will also be an important consideration in determining the level of involvement of CoGG in the planning for the coming Commonwealth Games," the letter warned.
While it was not specified how the city's involvement in the games could be limited, it is understood some within council believe the state government could exclude it from participating in events or limit its branding opportunities.
A council source also suggested the city may instead face difficulty in accessing later funding opportunities from the state if it did not financially contribute to the games.
'Huge concern' if council unable to provide for games, MP says
Geelong state Labor MP Christine Couzens on Tuesday said the state government had not been approached by the city regarding financial concerns.
"If they're saying they can't be involved in providing anything for the games, then that's a huge concern," Ms Couzens said.
Victorian treasurer Tim Pallas said the state government was in talks with the Geelong City Council, which he said was set to be a "big beneficiary" of the Games.
"There's great opportunity for Geelong. We'll continue to talk with them about what constitutes a reasonable and appropriate level of contribution," he said.
"We're not expecting a matching contribution, we're expecting a substantial contribution … We're not asking for a dollar-for-dollar matching contribution from local government."
The 2026 Commonwealth Games will be held across four regional hubs as part of a multi-city model, with Geelong, Bendigo, Ballarat and Gippsland each hosting an athlete's village and individual sports programs.
City of Ballarat mayor Des Hudson said all local government areas were experiencing "increased cost pressures in multiple areas due to inflation", but also said it was too early to estimate the financial implications of hosting the games.
"The City of Ballarat is always faced with balancing competing priorities, this is being made more challenging in an inflationary environment," Cr Hudson said.
City of Greater Bendigo acting CEO Andrew Cooney also said there were "financial pressures" in hosting the games, but also that it was important to keep in mind the "huge upside" to hosting the major event.
