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 watchdog, the Local Government Inspectorate (LGI), abruptly closed its investigation into the botched redevelopment of Daylesford's Rex Theatre. But here's where it gets even more baffling: despite years of probing and two detailed drafts, the LGI never produced a final report, citing insufficient evidence and improved council procedures. And this is the part most people miss—the LGI quietly admitted it might not even have the legal authority to publish such a report. Let's dive into this convoluted tale of wasted resources, shattered trust, and unanswered questions.
The saga began in 2014 when the Hepburn Shire Council envisioned a 'modest, practical, and sustainable' community hub, dubbed the Hepburn Hub. Among the shortlisted sites was the privately owned Rex Theatre, a grand but costly option requiring nearly $9 million in grant funding—far more than the initially preferred, council-owned town hall. Despite its high price tag and poor ratings on several criteria, the council mysteriously pivoted to the Rex in 2016, purchasing it for $6.34 million. Was this a prudent decision or a reckless gamble? Years later, the council admitted it couldn’t find evidence of an independent valuation before the purchase, raising eyebrows among locals and councillors alike.
Former mayor and current councillor Don Henderson recalls being barred from the site during construction, only to be shocked by the state of the project when finally granted access. 'This can't possibly be done for this amount of money,' he exclaimed. His concerns were well-founded. Initial estimates of $1.25 million in construction costs ballooned, and the project was eventually suspended in 2022, leaving the council staring at an additional $18 million to complete it. The building was sold later that year for $3.75 million—a staggering $2.6 million loss. With $3 million already spent, the shire was left reeling from a $5.6 million financial blow. How did this happen, and who is accountable?
In 2019, the LGI launched an investigation after a complaint from the council's new CEO. As the integrity agency tasked with probing local government misconduct, the LGI interviewed key figures and drafted detailed reports. Yet, five years later, the investigation concluded with a whimper. In September 2024, the LGI announced there was insufficient evidence of wrongdoing and that the council had improved its practices. No further action. No report. But why? A leaked letter to stakeholders revealed the LGI believed it lacked the legal power to publish the report under the Local Government Act 1989. This controversial interpretation has sparked outrage, with many questioning the watchdog's effectiveness. 'What is their purpose? What is their value?' asked Gina Lyons, former president of the Daylesford cinema, a community hub displaced by the project. Her frustration echoes that of many locals, who feel the LGI was 'asleep at the wheel' during this governance debacle.
The LGI's handling of the case has raised serious concerns about its resourcing and legal authority. Its website shows no annual reports in three years, and its 2021-22 report admitted that holding individuals accountable for breaches of local government law remains a 'greatest challenge.' Is the LGI equipped to fulfill its mandate, or is it a toothless tiger? The Victorian government, which oversees the LGI, has been tight-lipped about whether it has reviewed the body's legal validity or effectiveness. Meanwhile, the council has implemented over 40 of the LGI's recommendations, but questions remain about the inspectorate's role in driving these changes.
This story isn't just about a failed project or a stalled investigation—it's about trust, transparency, and accountability. Should the LGI have pushed harder for answers, or was it hamstrung by legal constraints? And what does this mean for future council projects? We invite you to share your thoughts in the comments. Is the LGI fit for purpose, or does it need urgent reform? The conversation starts here.
