A central Victorian council is set to be sacked over financial mismanagement after the State Government introduced a bill to dismiss it.

A Local Government Inspectorate report into the Central Goldfields Shire released last week found serious governance failures that had cost ratepayers an estimated $730,000.

The inspectorate found a significant amount of Government grant funding could not be accounted for, and employees had awarded themselves contract work.

Local Government Minister Natalie Hutchins moved to dismiss the council on Wednesday, saying Parliament only acted in the most serious cases of governance failures.

She said the council's sacking was the result of disturbing mismanagement over many years.

"The council itself has failed the people of Central Goldfields," she said.

Ms Hutchins described the report as "very damning and explosive", with systematic failures stretching over a 10-year period.

Some of the findings of the report go to the misuse and misconduct of land sales without adequate notification to the public about the intention to sell land, or proper valuations being done.

The report also highlighted that the council is the most socio-economically disadvantaged local government area in regional Victoria.

The precinct is also the second most disadvantaged local government area in the state.

Administrators will be appointed soon until fresh elections are held in 2020, the State Government said.

Ms Hutchins said the Government was left with little choice and it wanted to stand up for ratepayers.

She said after the report was released, there was little indication from the council that they were taking it seriously.

"We want to see real change and we want to see an end to misconduct in this council," she said.

Local says financial recovery could take decades

At last night's council meeting, one resident said it could take decades for the shire to recover.

Resident Wayne McKail said he was disappointed the council failed the community for so long without questions being asked.

"I think it will change a lot of things but I really think the recovery could even be 10 to 20 years it could even be longer," he said.

"Because you've got a whole endemic thing, which has just happened.

"It's like a cancer that's gone right through the whole society."

Ms Hutchins said the council's chief executive's future was being considered.

He was stood down and is due to face the Maryborough Magistrates Court charged with obtaining financial advantage by deception.

The Geelong City Council was sacked last year after a report detailed allegations of widespread bullying and dysfunction.