Council stoushes, density votes and a budget squeeze: Melbourne's week in city politics

The City of Melbourne confirmed this week it is staring down a $47 million structural deficit heading into the 2026–27 financial year, forcing councillors to choose between cutting services and lifting rates above the state government's 2.75 per cent cap — a threshold that requires ministerial approval from Local Government Minister Melissa Horne. The vote on the final budget package, delayed from its original June 24 sitting, is now locked in for the full council meeting on July 15 at Melbourne Town Hall.

The timing is awkward. The Allan government has spent much of the year pushing its housing density agenda through local councils, and any City of Melbourne rate rise application lands squarely in the middle of that political relationship. Councillors who backed the recent medium-density overlay changes along the Upfield corridor — covering suburbs including Brunswick and Coburg — are now being asked to sign off on spending cuts that could gut the planning compliance team responsible for enforcing those same new rules.

Fitzroy North and the density flashpoint

Yarra City Council had its own fireworks. A packed community meeting at the Edinburgh Gardens rotunda on Wednesday drew roughly 200 residents opposing a proposed six-storey mixed-use development on St Georges Road, Fitzroy North, lodged under the state government's new Activity Centre Zone provisions. Objectors argued the site's proximity to the Merri Creek parklands should exempt it from maximum allowable heights under the new framework. Yarra's planning officers are expected to report back to council at the August 5 meeting, but the state's new fast-track approval pathway means VCAT could hear the matter independently if council fails to decide within 60 statutory days.

The dispute is not isolated. Across Port Phillip, residents near the South Melbourne Market precinct have filed 34 formal objections to a comparable rezoning proposal since May, according to figures tabled at the Port Phillip Council meeting on July 1. The council voted 5–4 to request that the Department of Transport and Planning review the traffic impact modelling before proceeding — a delay that planning advocates say is being used as a blocking tactic dressed up as due diligence.

Inner-city housing prices have softened, with CoreLogic data showing Melbourne dwelling values down 3.1 per cent over the 12 months to June 2026, yet first-home buyer activity in council areas like Darebin and Moonee Valley remains sluggish. Agents report that uncertainty over what will actually get built — and where — is giving buyers pause even as prices cool.

CFMEU shadow hangs over capital works

The industrial relations climate is adding another layer of complication. The City of Melbourne's $280 million capital works program for 2026–27 includes upgrades to the Queen Victoria Market precinct and Stage 3 of the Greenline linear park along the Yarra's north bank. Both projects carry enterprise agreements that are currently under re-negotiation with the CFMEU, whose Victorian and Tasmanian branch remains under federal administration. Council officers warned in budget documents released Tuesday that cost blowouts of 8 to 12 per cent are possible if agreements are not settled before tender close dates in September.

Moonee Valley City Council is watching that situation closely. Its long-stalled Flemington Road cycling corridor — a 2.4-kilometre separated lane connecting Parkville to the Arden urban renewal precinct — was finally gazetted in June but has yet to go to tender. A council spokesperson confirmed the project remains on track for a September 2026 construction start, budget complications notwithstanding.

Residents and ratepayers wanting to make submissions on the City of Melbourne's draft budget have until July 11. The online portal is open through the council's Participate Melbourne platform, and in-person sessions are scheduled at the Library at The Dock on Collins Street on July 7 and July 9 between 5:30 pm and 7:30 pm. Given the size of the funding gap, planners and community groups who showed up to fight density battles this week may want to check whether the staff processing their applications will still have jobs come August.