Victorian Premier Jacinta Allan alerted to Commonwealth Games funding crisis

New Victorian Premier Jacinta Allan was told for many months that the Commonwealth Games budget was in crisis.

Victorian Premier Jacinta Allan. Picture: NCA NewsWire / Andrew Henshaw

The grave financial challenges facing Victoria’s failed 2026 Commonwealth Games were discussed for many months before their cancellation, with a confidential letter showing Premier Jacinta Allan was warned in April the costs were going to be “significantly in excess” of the $2.6bn budget.

The letter – seen by The Australian – was sent on April 4 by Games chair Peggy O’Neal to the then Commonwealth Games Delivery Minister Jacinta Allan, requesting an emergency funding boost of more than $700m.

This was more than two months before Ms Allan spoke ­effusively to a parliamentary committee where she claimed “tremendous progress” was being made on delivering the 2026 Commonwealth Games. Witnesses to Monday’s parliamentary inquiry into the failed bid detailed how the budget pressures were discussed in government circles well before the Games were axed.

Former Commonwealth Games organising committee chief executive Jeroen Weimar said officials were working hard in November and December last year pulling together the finances for the project, facing headwinds because the model was regional with four athletes’ villages and multiple cities.

Mr Weimar said by early March this year there were regular discussions with the key ministers – including Ms Allan – about the Games.

“Sure, costs were part of the program,’’ Mr Weimar said of the ministerial discussions.

Department of Jobs, Skills, Industry and Regions secretary Tim Ada also detailed how officials had allegedly told Ms Allan about potentially billions of dollars in cost blowouts several months before the Games were abandoned.

Monday’s evidence provoked demands from the upper house committee for Ms Allan to give evidence to the inquiry, which is unlikely because she is not compelled to under parliamentary rules.

A government spokeswoman said members of parliament were not required to attend inquiries of another house and that the Victorian Auditor-General’s Office was better placed to investigate the issue.

Ms O’Neal’s letter, obtained by The Australian, warned Ms Allan on April 4 of cost issues, which was more than eight weeks before Ms Allan told parliament that the Games were travelling well.

Ms O’Neal’s letter said: “We recognise that our revised figures are significantly in excess of the original estimates from early 2022. This reflects the significant expansion of the Commonwealth Games sports program since that time, the selection of predominantly single-purpose venues and the additional logistical, transport, workforce and cost challenges of operating such a large regional footprint.”

Ms O’Neal issued a blunt warning to Ms Allan over the budget. “We recognise that our proposed budget will represent significant challenges to government as there are other competing demands on scarce public resources,” the Games chair wrote.

“We have worked with OCG to identify scope reductions for the government to consider that could materially reduce the budget requirement.”

Ms O’Neil warns Ms Allan in letter that organisers were confronting “critical deadlines across all areas of our work program”.

“At this critical stage of the program, the most important priority for the OC is to ensure that the overall budget and scope of the Games are aligned.”

A financial table attached to the letter listed the main cost blowouts, including a $97.1m increase in “culture and ceremonies”, $93.5m in “tech and broadcast”, $91.6m in “workforce & accreditation”, $20.2m in “sport”, $12.4m in “communication and marketing”, $44.3m in “other costs”, and $261m in a “temporary overlay”. The Department of Premier and Cabinet produced a timeline of the event showing it advised former premier Dan Andrews of the budgetary risks of the Games on June 13 – the same day Ms Allan stridently backed the Games.

“We can do this. We know we can do this,” she told the Public Accounts and Estimates Committee on June 13. “There is huge energy, excitement and effort.”

About an hour later, according to that timeline, the state’s most senior public servants told Mr ­Andrews the Games no longer presented as good value.

The timeline shows Mr Andrews instructed DPC to seek external legal advice on potentially killing the Games on June 14 but sources said that Ms Allan was not told of this decision until shortly before the lawyers Arnold Bloch Leibler were called about 5pm that day.