Victorian taxpayers to be slugged $380m for axing of Comm Games

Daniel Andrews says a bill of $380m for dumping the Commonwealth Games was the best outcome, saying challenging the fee would have risked a “lawyers’ picnic”.

Victorian taxpayers will be left with a $380m bill for the Andrews government’s decision to cancel the 2026 Commonwealth Games.

The government confirmed on Saturday morning it had reached the figure following negotiations with the Commonwealth Games Federation and Commonwealth Games Australia.

All disputes over the cancellation of the games have now been settled.

“The parties also agreed that the multi-hub regional model was more expensive to host than the traditional models,” a joint statement said.

“The settlement was supported by the mediators.

“The terms of the settlement will otherwise remain confidential.

“The settlement finalises all matters between the parties.

“The parties are legally bound not to speak further regarding the details of the settlement.”

Premier Daniel Andrews and Treasurer Tim Pallas address the media over the Commonwealth Games bill. Picture: Tony Gough

Following the decision to cancel the games, former New Zealand Judge, Kit Toogood, KC, and the former Chief Justice of the WA Supreme Court, Wayne Martin, KC, were appointed as joint mediators.

Premier Daniel Andrews on Saturday said the Games settlement meant the government could proceed with building houses in regional Victoria.

He said the $380m settlement was the best outcome and that challenging a “break fee” would have risked a lawyers’ picnic.

“And who knows what the ultimate number would have been.

“Who knows who wins and who loses in these sorts of matters, together with the inevitable appeals and appeals on appeals,’’ he said.

“We can focus on delivering thousands of houses and other sporting infrastructure across regional Victoria.’’

Premier Daniel Andrews said the bureaucrats and consultants who put together the budget for the Games, which was blown by more than $3.6bn, did their “best”.

“It is my view that 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,” he said.

Mr Andrews said the Auditor-General would examine the initial costings, which estimated the Games would cost $2.5-$3bn, but said that “unforeseen” circumstances had rocked the state’s forecasting.

“I don’t think even then, with a conservative outlook, you could anticipate some of the kind of hyperinflation that we’ve seen,” he said.

When asked whether Victorians would be sceptical about costs his government put on projects from now on, Mr Andrews said the government “has delivered more infrastructure than any government in the history of this state”.

“It’s about cost and benefits,” he said.

“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. He said it was not “particularly fair” to compare a major transport project with a 12 day sporting event.

“This is unique,” he said.

“The benefits have to outweigh the costs, otherwise you don’t proceed.”

Treasurer Tim Pallas says a range of factors are to blame for the cost explosion. Picture: Tony Gough

Treasurer Tim Pallas said a range of factors had been to blame for the cost explosion, which resulted in the Games security and police budget more than doubling to $492m, and the cost of transporting officials and athletes almost tripling to $300m.

This included the impacts of the war in Ukraine, the opening up of China post-Covid, which caused construction supply chain problems, and 12 interest rate rises in a row.

He said the $380m cost to taxpayers for breaking the contract was the best result that could have been expected under the circumstances.

“This is the best outcome possible that could possibly be achieved for the purposes of moving on and dealing with the things that regional Victoria needs and deserves,” Mr Pallas said.

Victorian Libertarian MP David Limbrick was this week appointed chair of a parliamentary committee set up to probe the cancellation of the event.

The committee that will include three government MPs, three Liberals, and three crossbenchers.

Andrews says the government ‘has delivered more infrastructure than any government in the history of this state’. Picture: Tony Gough

The Games probe was established after all upper house non-government MPs voted to support an opposition motion to set up a parliamentary inquiry.

It will have the power to call Daniel Andrews to appear, but can’t compel him to testify.

Attorney-General Jaclyn Symes, the leader of the government in the upper house, has previously confirmed the Premier would not have to appear.

However, former Commonwealth Games Legacy Minister Harriet Shing, who is a member of the upper house, is set to be front and centre of the inquiry.

External figures, such as former Games boss Jeroen Weimar, could be compelled to give evidence.

On Saturday, Opposition Leader John Pesutto said the true cost of cancelling the games remained unclear.

“Victorians will pay at least $380m for an event that will never happen in a debacle that has damaged Victoria’s reputation internationally,” he said.

“The true cost of this debacle will be significantly higher but we are likely to never know because the Andrews government will do everything it can to stop Victorians finding out the truth.

“Its costings of the Games under Labor’s model are woefully inadequate and another exercise in cynical spin by the Andrews government.”

Victorian Chamber of Commerce and Industry chief executive Paul Guerra said the Games cancellation cost of at least $380m further added to the state debt.

“As Victorians are not likely to receive clarity on how such a significant cost blowout occurred, or how much the legal fees and spent wages have amounted to, we now shift our focus forward,’’ Mr Guerra said.

“We will be resolute in ensuring the committed $2bn is spent to recover Victoria’s reputation globally, building infrastructure in the state’s regions and attracting more tourism and events into Victoria in a timely and responsible manner.”

Former Commonwealth Games Legacy Minister Harriet Shing is set to be front and centre of the inquiry.

Former Premier Jeff Kennett said the cost would just be piled up on to the state’s massive debt but the reputational damage to Victoria would be many times that.

“I’m glad it’s been resolved but there are still millions of dollars spent preparing for the Commonwealth Games, such as offices and individuals’ wages.

“There’s the damage to Victoria’s reputation and potential damage to any sporting organisation wanting to hold an event here.’’

Mr Kennett said Melbourne had already missed out on the major matches of the FIFA Women’s World Cup and feared other sporting events may pass the city by.

“We were always the sporting capital.’’

Victoria’s deputy Liberal leader David Southwick labelled the Games settlement a “debacle’’.

“$380m to cancel the Commonwealth Games contract is the tip of the iceberg and doesn’t begin to cover the damage to our international reputation,’’ he said.

“Not to mention taking out the trash on a Saturday to avoid scrutiny. Disgusting.”

And Tom Tate, mayor of the Gold Coast which hosted the 2018 Games, said every Australian should be appalled by the loss of $380m.

“That money has been burnt with zero return. Worse, our nation’s reputation across the Commonwealth has been tarnished,’’ he told news.com.au.

“From a business and contractual perspective, Australia is no longer seen as ‘good for its word’ and that will cost us billions in future trade agreements and international goodwill.’’

Cr Tate said the Gold Coast and Perth were both interested in a joint 2026 event.