Commonwealth Games ‘cost pressures’ of $2bn still not allocated

Budget blowouts used by the Andrews government to justify axing the Commonwealth Games include a whopping $2bn in “cost pressures” — but they are not specifically allocated.

Commonwealth Games changes. Picture: Today/Channel 9

The budget blowouts used to justify axing the Commonwealth Games in regional Victoria include a whopping $2bn in “cost pressures” that are not specifically allocated.

Documents released by the Andrews government show that since it completed a business case last year on hosting the 2026 event in regional Victoria, forecast costs had blown out by up to $3.86bn.

Soaring transport, police and security, and athlete village construction costs shot a $1.3bn hole in the budget, the documents say.

Andrews government documents show that since it completed a business case on hosting the event in regional Victoria forecast costs had blown out by up to $3.86bn. Picture: Luis Enrique Ascui

The biggest single driver was the cost of building athletes’ villages across regional hubs, which had soared to $1.02bn as of last month.

This was at least $773m higher than the government estimated last year.

Incredibly, the government business case created last year forecast that even under a “worst case” scenario the construction of villages at Ballarat, Geelong, Bendigo and Morwell would have cost $250m.

The government’s recently revised cost estimates show transport was another significant blowout driver, and would have added $200m to the price tag of the event, while police and security bills were running almost $300m higher than the business case “worst case” estimate.

When Dan Andrews revealed the Games could cost up to $7bn, Commonwealth Games Australia boss Craig Phillips attacked the figure as a fantasy. Picture: Monique Harmer

The government has finally released its business case and revised cost estimates of building infrastructure and running the Games, which last month it used to justify cancelling the contract for the 2026 global event.

The torching of that contract will cost taxpayers an extra $380m, it was revealed on Saturday morning.

When Mr Andrews dumped the event he had signed up to just the previous year, he said it would cost $6bn-7bn to host after “unforeseen” cost pressures, and that the total bill was too expensive for taxpayers.

Premier Daniel Andrews and Treasurer Tim Pallas presser at Parliament Back Gardens, Victoria. Picture: Tony Gough

But $2bn of the $6.865bn revised budget estimate released on Saturday morning was not attributed to a specific measure, and was instead labelled “additional cost pressures” on the government document.

In notes at the bottom of the document, the government says this $2bn may include “hyper-escalation driven by compressed timelines”; “regional supply constraints and broader inflationary pressures across the economy”, “accommodation shortfalls in the regions increasing cost”, and; “major sporting code displacement costs”.

When Mr Andrews revealed the Games could cost up to $7bn to host across five different regional Victoria locations, Commonwealth Games Australia boss Craig Phillips attacked the figure as a fantasy and said the organisers had not seen any figures like that during event meetings.

In documents released on Saturday morning, the government also sought to cast some blame on Commonwealth Games Federation rules that meant there were “strict conditions placed on the location of the athletes’ villages and there was limited land that met this criteria”.

“The requirements for housing during the Games, as compared to after the Games, and land not being suitable at this time for permanent housing in Ballarat means that it was necessary to shift to building a high proportion of temporary demountable structures, which significantly reduced any potential private sector interest,” it says.

“Market soundings have also indicated cost escalation would further increase the required budget.”

Originally published as Commonwealth Games ‘cost pressures’ of $2bn still not allocated