Fears Commwealth Games axing could cost Victorian taxpayers up to $600m
Premier Daniel Andrews remains adamant that a $380m settlement with Games organisers was the ‘best outcome’ possible – but fears of another blowout are growing.
Victoria
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The Andrews Government wasted up to $600m of taxpayers’ money when it axed the Commonwealth Games.
While Daniel Andrews declared a $380m settlement with Games organisers as “the best outcome Victoria could get’’, it is feared the cost will skyrocket with hundreds of millions of dollars lost on organisation and staffing.
While the Premier said “not a dollar more’’ than the $380m would be spent on the legal settlement, he did admit the total Games bill had not “bottomed out” – but did not think the combined cost would go past $600m.
The payout details were released on Saturday morning after a final night of negotiations with the Commonwealth Games Federation.
Opposition Leader John Pesutto said the government could no longer be trusted on any budget measure and that the “true cost of this debacle will be significantly higher”.
Mr Andrews on Saturday released cost estimates showing that hosting the Games across five regional cities in 2026 would have cost $6.9bn – at least $3.9bn more than estimated in February last year when it signed an agreement with the Commonwealth Games Federation.
Those disastrous early estimates were produced by Treasury officials, major events chiefs and highly paid consultants, but the Premier said he was ultimately accountable for the shemozzle.
“I’m accountable for the decisions the government makes,” he said.
“The most senior bureaucrats in the state, supported by external consultants, did their very best work … to try and estimate the cost of delivering these Games. Those estimates were wrong.”
Damning documents released by the government on Saturday also revealed how the original estimates for the Games had blown out by almost $4bn, including a cabinet-in-confidence business case showing the government was warned last year about the high risk of tight timelines affecting costs.
It also shows that initial budgets were set using information from the 2018 Gold Coast Commonwealth Games – which cost $1.41bn to host in one city – and that a decision was so rushed there was not time to do a “more robust ‘bottom up’ approach” because “key elements of Games planning are not yet understood”.
Despite this, the government pushed on with an election-year commitment to host a more complex model across the five regional Victorian areas, which sent transport and security bills through the roof.
Mr Andrews denied political concerns helped dictate the decision-making, which occurred following years of Covid-19 chaos, saying a “proper process” was followed.
He said $2bn would still be spent on regional sport facilities and 1300 new homes in the bush, and that the state budget allocation of $2.6bn for the entire Games should pay for those investments and sunk costs.
“There will not be a need for us to add any further money to the original budget,” he said.
This would mean Victoria’s debt would not soar even higher than the eye-watering $170bn forecast within four years in the state budget.
When in July Mr Andrews revealed he was dumping the Games, he described the decision as easy, because its budget had skyrocketed.
Cost overruns released on Saturday show the biggest identified cost increase in the government documents was the construction of athlete villages at four hubs, which were budgeted at a bargain $250 in the business case’s “worst-case scenario”, but which by July this year had soared to more than $1bn.
Police and security costs more than doubled to $492m for the 12-day event. But the biggest blowout of $2bn was not specified in documents but instead called “additional cost pressures” such as “hyper-escalation driven by compressed timelines”, “regional supply constraints”, “broader inflationary pressures’’, “accommodation shortfalls in the regions’’ and “sporting code displacement costs’’.
Mr Andrews could give no detail about these costs but said the government would try to provide more information.
With the blowout in Games costs due to inflation and apparent supply pressures, there are also growing fears of more blowouts to come in Victoria’s Big Build projects, which have already ballooned by more than $15bn on original estimates.
Opposition Leader John Pesutto said: “This mess and the excuses Daniel Andrews has used to cover up the incompetence of his government, now raise questions over the accuracy of costings for every major project in Victoria”.
He said the reasons the government gave for blowouts should ring alarm bells for Victorians due to their implications for other projects.
“We were broke yesterday, but we’re even more broke today, which is why we need an urgent budget update,” he said.
Mr Andrews rejected the concerns, saying the Commonwealth Games was “unique”. “It’s not particularly fair, I think, to compare a big transport project, for instance, with a 12-day sporting event,” he said.
“It’s about costs and benefits. There are a number of projects that when you go out into the market, you do your best to estimate what they’ll cost and then you wait to see what comes back when you open up the tender box.”
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