Imagine a multi-million-dollar council project gone awry, an investigation that dragged on for years, and then—nothing. No answers, no accountability, and no final report. This is the shocking reality for the Hepburn Shire Council and its residents, who are left in the dark after Victoria's Local Government Inspectorate (LGI) abruptly closed its probe into the botched redevelopment of Daylesford’s Rex Theatre. But here’s where it gets even more baffling: despite years of investigation and two detailed drafts, the LGI never produced a final report. Why? And what does this mean for transparency and trust in local governance? Let’s dive into this tangled tale of wasted resources, unanswered questions, and a watchdog that seems to have lost its bark.
The Project That Went Off the Rails
In 2014, the Hepburn Shire Council set its sights on creating a new multipurpose hub, dubbed the Hepburn Hub, to revitalize key services like the town’s library and council offices. Among the shortlisted sites was the Rex Theatre, a privately owned building on Daylesford’s main street. Despite ranking poorly on several criteria and carrying a hefty $9 million price tag—far more than the council-owned town hall initially favored—the Rex was mysteriously chosen. Councillors were informed of a ‘new opportunity’ to purchase the building in 2016, and the motion was swiftly carried. The council bought the site for $6.34 million, becoming an owner-builder on what would soon become a financial nightmare.
Construction costs spiraled, delays mounted, and claims of mismanagement surfaced. By 2022, the council faced an additional $18 million to complete the project. With no end in sight, the project was abandoned, and the building was sold for $3.75 million—a staggering $2.6 million loss. Adding insult to injury, the council had already sunk $3 million into the project, bringing the total loss to $5.6 million. For a small council, this was a catastrophic blow.
The Investigation That Fizzled Out
In 2019, the LGI launched an investigation into the project’s failure after receiving a complaint from the council’s new CEO. As the watchdog tasked with probing local government wrongdoing, the LGI interviewed key figures and prepared at least two detailed drafts. But years passed, and the final report never materialized. In September 2024, the LGI announced it was closing the investigation, citing insufficient evidence of any breaches of local government legislation. It also claimed the council had improved its practices, rendering further action unnecessary.
But here’s where it gets controversial: the LGI quietly revealed in a letter to stakeholders that it lacked the legal authority to publish the report under the Local Government Act 1989. This crucial detail was omitted from its public media release, leaving many to wonder: Was the LGI trying to avoid scrutiny? Or was it simply hamstrung by legal constraints? Either way, the lack of transparency has fueled skepticism and frustration.
The Human Cost of Inaction
Beyond the financial losses, the fallout from this debacle has been deeply personal. The Daylesford cinema, a beloved volunteer-run community hub, was displaced during construction and has yet to reopen. Former president Gina Lyons and her committee resigned in despair, echoing the sentiments of many locals who feel let down by both the council and the LGI. ‘What is their purpose? What is their value?’ Lyons asked, questioning the watchdog’s effectiveness in addressing ‘really important governance failures.’
The Bigger Picture: Is the LGI Fit for Purpose?
This case raises troubling questions about the LGI’s capacity and independence. With just 10 employees and no annual report published in three years, the agency appears to be stretched thin. Its 2021-22 report admitted that holding individuals accountable for breaches of local government law remains a ‘greatest challenge’ due to the time and cost of prosecutions. Yet, the state government’s response has been vague, offering little reassurance about the LGI’s effectiveness or legal standing.
And this is the part most people miss: the LGI’s failure to publish a report isn’t just about this one project. It’s about the erosion of trust in local governance and the mechanisms meant to hold it accountable. If a watchdog can’t—or won’t—deliver answers, what’s the point?
Where Do We Go From Here?
As the Hepburn Shire Council moves forward with implementing over 40 of the LGI’s recommendations, the community is left with more questions than answers. Was the LGI’s investigation thorough? Did it face undue pressure to bury the report? And most importantly, how can we ensure this never happens again?
Here’s a thought-provoking question for you: Should the LGI be granted greater powers and resources to fulfill its mandate, or is it time to reconsider how we hold local governments accountable? Share your thoughts in the comments—let’s keep this conversation going.
