Victoria banked on getting $200m in federal funding when it bid for Games

The Victorian government assumed it would receive more than $200 million in federal funding when it was bidding for the 2026 Commonwealth Games despite no commitments being made.

It comes as the state opposition pushes for an independent review of the costs of projects and programs in the Andrews government’s budget, claiming the release of new documents had cast doubt over its calculations.

Victorian Premier Daniel Andrews and state Treasurer Tim Pallas on Saturday.Credit: Chris Hopkins

On Saturday, Premier Daniel Andrews revealed taxpayers would pay $380 million for cancelling the Games and released the original business case that informed its initial $2.6 billion price tag.

It showed that the officials drafting the document in January 2022 had assumed federal funding of between $205 million and $217 million, and used this figure when calculating costs and revenue.

This assumption was based on Commonwealth contributions to the 2018 Gold Coast event of $156 million, or $164 million in 2022 figures, and $273 million for the Melbourne 2006 Games, which was equal to about $378 million in 2022.

The Department of Jobs Precincts and Regions (DJPR) also provided advice that informed the number and almost all of this funding was expected for infrastructure projects.

The MCG lit up with fireworks at the closing ceremony of the 2006 Commonwealth Games.Credit: Penny Stephens

“Based on advice from DJPR, we have assumed that the federal government will fund 50 per cent of the capital expenditure for venues in the best case, while the amount assumed in the worst case has been agreed with DJPR,” the document says.

In another section, the business case says that “funding from the private sector and Commonwealth government will be sought to assist funding the Games”.

The state was also expecting to receive some support from councils based in the regional hubs that were due to host Games events, estimating that between $15 million and $100 million would come from local government.

The document, written at the start of 2022, was drafted before the election of the Albanese government and no public commitment of funding had been made from either Labor or the Coalition before its cancellation.

Federal Infrastructure Minister Catherine King.Credit: Alex Ellinghausen

Discussions of a federal contribution ramped up after the Commonwealth pledged $3.4 billion for the Brisbane Olympics in 2032, but no money was put aside in this year’s budget for the Victorian event.

Federal Infrastructure Minister Catherine King said in March that the Commonwealth had not yet received a “detailed ask” but flagged an interest in “legacy” projects such as social housing.

Andrews said on Sunday that as early tender work started to come back to the government this year, it became clear costs were soaring.

“We tested all those assumptions, we looked at different ways in which we might deliver the Games, we looked at different ways in which we might reduce the costs,” he said.

“You can make these Games cheaper, but as they become cheaper, you get less benefit.”

The premier said it was too early to say what the cost of redundancies, incomplete work and other charges would be on top of the $380 million compensation payout, but it would all be contained within the original $2.6 billion.

“We’ve been able to close this out and settle it. It’s done and dusted,” he said.

Other parts in the business case show the government expected almost all transport to Games venues to happen by public transport and that athletes and other important staff could travel to events with dedicated lanes for cars.

The Ballarat saleyards where an Athletes Village was expected to be built. Credit: Jason South

The cost of transport for the whole event was expected to have been $110 million, but by July 2023, this had soared to $306 million.

Between $45 million and $60 million would have been needed to buy carbon credits to offset emissions and keep the event carbon-neutral.

The Victorian Auditor-General’s Office and a parliamentary inquiry are investigating the Games’ cancellation.

Shadow Treasurer Brad Rowswell said the figures in the government’s business case showed there needed to be an “immediate update to the budget with an independent oversight mechanism”.

Shadow treasurer Brad Rowswell with Opposition Leader John Pesutto.Credit: Gus McCubbing

“They’ve stuffed up the budget when it comes to the Commonwealth Games,” he said.

“I have zero confidence in them getting the budget estimates on other major projects and other things around the state right.

“That’s why we’re asking for immediate, independent oversight through that process”

The Morning Edition newsletter is our guide to the day’s most important and interesting stories, analysis and insights. Sign up here.