Scrapped Victorian Commonwealth Games bill at $600m and counting

The costs of the Commonwealth Games debacle are surging towards $600m.

Victorian Premier Jacinta Allan. Picture: NCA NewsWire / David Crosling

The Victorian government has so far blown nearly $600m on a Commonwealth Games it will never run as its major events boss conceded he never read the business case.

Victoria’s Treasury boss David Martine said the total “core” costs of running a failed contract process for the Games jumped to $555m by August.

He said this was made up of a $380m compensation deal plus $175m of extra costs with the likelihood the latter figure would climb but not substantially.

The government estimate, detailed during the Commonwealth Games parliamentary inquiry into the debacle, relates to so-called “core costs”, with further political debate to be had on what should be included in the final bill.

Mr Martine also faced questioning about the failed business case, which originally predicted the Games would cost a total of $2.6bn. But the final estimate rose to between $6bn and $7bn, with the opposition accusing bureaucrats of concocting a rubbery figure of about $6.85bn.

Mr Martine said there would be small additions to the $175m ­aspect of the taxpayer bill, which includes departmental costs. “But I wouldn’t have thought that would be materially much more,’’ he said.

The hearing heard that Visit Victoria, the government’s major events arm, had presented the idea of the Games being run in several regional areas; the multi-city, country approach has been blamed for the up to $4.4bn cost blowout on original estimates.

Visit Victoria chief executive Brendan McClements told the parliamentary inquiry into the failed Games contract that he had never read the business case; VV did not produce the business case, which was overseen by government. Mr McClements also told the hearing that VV’s role had changed sharply once the ­implementation process had progressed.

Brendan McClements, CEO of Visit Victoria.

He said VV’s role had been ­engineering the concept of the Games and raising with government whether or not it should be considered as an event worth pursuing. “I haven’t seen the business case,” he said.

The business case has been widely savaged as failing to detect the significant financial challenges facing the proposal. It was developed by the Department of Jobs, Precincts and Regions and big-four consulting firm Ernst and Young. The budgeted cost of running the Games jumped from $2.6bn to between $6bn and $7bn.

The regional Games bid, as backed by VV, meant there were repeated cost blowouts caused by having multiple cities.

Victoria will pay $380m compensation to the three Commonwealth Games bodies for cancelling the 2026 event after basing the original costs on chronic underestimates of how much needed to be budgeted.

Costing figures show that in the original business case, made well before last year’s election, the best-case scenario was the delivery of an event costing $2.5bn and a worst case of $3bn.

Mr McClements also said the cancellation of the Games had not affected Victoria’s reputation as a destination for major events. “Not for a moment,” he said.

He faced questioning from ­opposition MPs about how this was possible but maintained his evidence.

This was based on multiple discussions with foreign sporting and cultural bodies, he said.

The red flags surrounding the event were laid bare in the business case, outlining how the government was warned in 2021 and again later that there were significant potential issues relating to the fast-tracked Games, with costings based in part on the successful 2018 Gold Coast Games.

The upper house inquiry into the 2026 Commonwealth Games bid is continuing.