Communities Set Policy

Participatory budgeting gives communities direct control over a defined portion of public spending, rather than leaving allocation to ministerial discretion or an opaque departmental process. The key structural difference from standard community consultation is that the community's vote is binding: the project that wins the most support is funded, regardless of whether it was the department's preferred option. Victoria has no participatory budgeting mechanism at the state level, and the Local Government Act 2020 does not require councils to adopt it, though several Melbourne councils have run small pilots. The policy proposes a mandated participatory budgeting allocation in each local government area, funded through a dedicated line in the state budget, as a complement to the existing capital works program rather than a replacement for any existing funding stream.

Participatory budgeting at the state level requires a legislative basis establishing the funding allocation, the eligible project categories, the voting mechanism, and the oversight body. In most international examples, the participatory budget is administered by local government as the proximate decision-making body, with state funding flowing through a grants program. The Victorian Grants Commission could administer the state-funded allocation, using the VEC's existing voter roll infrastructure for the voting mechanism. Eligible project categories should be defined broadly to include local transport infrastructure, public space, community facilities, and environmental works, but should exclude recurrent expenditure to prevent the mechanism from being used to fund ongoing services that then become unfunded commitments when the participatory allocation shifts.

The economic case for participatory budgeting is that it allocates capital to locally identified priorities rather than centrally modelled ones, which tends to produce better utilisation of public space and lower subsequent maintenance costs because the community has a stake in the project's success. Porto Alegre's participatory budgeting program, at its peak allocating up to 21% of the municipal budget through the process, produced documented improvements in sewerage access and road paving in lower-income areas, with no corresponding reduction in service delivery in wealthier areas: the participatory mechanism directed resources toward previously underserved populations, not away from better-served ones. The state's own Victoria Grants Commission already administers formula-based grants to councils: adding a participatory component to an existing administrative structure is a lower-cost implementation than building a new one.

Participatory budgeting is vulnerable to capture by organised advocacy groups who mobilise their members to vote, producing outcomes that reflect the preferences of the most organised rather than the most representative community members. This is the documented failure mode in several Australian council pilots where a single issue group dominated the voting. The fix is a combination of deliberative and voting elements: projects that reach a threshold of community nominations go to a deliberative panel (randomly selected, as in the Citizens' Assembly model) before a public vote, preventing a single-issue campaign from bypassing the broader community discussion. Minimum participation thresholds per ward or LGA should also be set to prevent low-turnout votes from binding large spending commitments.

Paris's participatory budgeting program allocated EUR 100 million in city capital spending in 2014, with 77,000 participants voting on projects submitted by residents. By subsequent cycles, participation had grown to over 100,000 voters. Porto Alegre's program (1989 to mid-2000s) is the most-studied example in the academic literature, with documented effects including an increase in the share of the capital budget reaching lower-income neighbourhoods, improved sewerage coverage, and higher school enrolment rates in areas where participatory budgeting allocated infrastructure funding. Scottish Government's participatory budgeting program, legislated in 2021, requires each Scottish council to run at least one participatory budgeting process annually, with a state-funded pot of at least 1% of the devolved budget available for community allocation: this is the closest direct legislative precedent for what this policy proposes.

This requires a parliamentary majority to mandate participatory budgeting statewide. A Fusion MP's role from one seat is twofold: introduce the enabling Bill so the model is on the public record with a fully drafted legislative framework, and use supply negotiations to extract a government commitment to a voluntary state-funded participatory budgeting pilot in at least two outer metropolitan councils per term, targeting the LGAs with the largest VAGO-documented public transport access gaps. The pilot commitment is the one-seat deliverable: it generates real evidence about participation rates and project outcomes in Victorian conditions, and it creates a political constituency of residents who experienced the mechanism and can advocate for it being extended. The mandatory national model follows from the evidence the pilot produces, and from the parliamentary majority that evidence may help build.