Vic government wasted $589m on Comm Games, Auditor-General finds

Auditor-General Andrew Greaves found the then Premier’s claim - used to justify the cancellation - that the event’s budget had blown out from $2.7bn to almost $7bn, was overstated.

Daniel Andrews leaving Victorian parliament for the last time as Premier in September 2023. (Photo by Asanka Ratnayake/Getty Images)

The Victorian government’s decision to cancel the 2026 Commonwealth Games cost taxpayers $589 million “with no discernible benefit,” the state’s Auditor-General has found.

Auditor-General Andrew Greaves found then Premier Daniel Andrews’s claim - used to justify the cancellation - that the event’s budget had blown out from $2.7bn to almost $7bn, was overstated by about $2bn.

Of the more than half a billion dollars spent not holding the event, the Auditor-General concluded: “This waste would have been avoided if agencies had worked together better to give frank and full advice to the government before it decided to host the Games.”

“The government relied on DJSIR’s (the Department of Jobs, Skills, Industry and Regions’) business case when it decided to host the Games and determined the budget.

“The business case raised the risks associated with hosting the Games. But it underestimated the costs and overstated the benefits.”

“DJSIR, DPC (the Department of Premier and Cabinet) and DTF (the Department of Treasury and Finance) knew this but did not advise government to delay a decision on hosting until a fit-for-purpose business case could be provided.”

Then Premier Daniel Andrews and Sports Minister Martin Pakula at Ballarat’s Mars Stadium in March 2022, announcing Victoria will host the Commonwealth Games in 2026. Picture: Timothy Cox

Mr Greaves found DPC and DTF had “consistently raised” the issue of cost and other risks during 2022 and early 2023.

“But they did not advise government that hosting the Games might be unfeasible until June 2023,” he said.

“The cost estimate for the Games that the government publicly released in August 2023 of $6.9 billion was overstated and not transparent.

“It added significant amounts for industrial relations and cost escalation risks. But it did not disclose that the budget already included $1 billion in contingency allowances to cover these and other cost risks. After the government decided to withdraw from hosting, DPC quickly settled the state’s liabilities.”

The Auditor-General found the gross Games budget estimate rose from $2.7bn in March 2022, to around $4.9bn in mid-2023 -- well short of the $6.9 billion claimed by the government in cancelling the event.

Of the $589m wasted, Mr Greaves found $112m, or 19 per cent, was spent on employee and operating costs within DSIR, including fees paid to the Commonwealth Games Federation, but excluding payments to Development Victoria for venues and athletes’ villages.

Victorian Premier and former Minister for Commonwealth Games delivery, Jacinta Allan. Picture: NCA NewsWire / David Crosling

Another $38m, or six per cent, was spent on employee and operating costs at the Victoria 2026 Organising Committee, with $42m, or seven per cent spent on detailed planning and delivery cases for venues and villages, including due diligence, design work, site investigations early works planning, employee costs and professional services at Development Victoria.

Most of the remainder, namely $380m, or 64 per cent, was spent on compensating and reaching a settlement with the Commonwealth Games Federation.

The auditor found the estimated cost to government for the athletes’ villages doubled to more than $500m, while the estimated costs of major competition venues doubled to around $442m.

Opposition Leader John Pesutto said Premier Jacinta Allan — who was previously Minister for Commonwealth Games Delivery — had “serious questions to answer”.

“This is a damning report that has found Premier Allan on at least two separate occasions made misleading representations about the costs and viability of the Games,” Mr Pesutto said.

“As a consequence, Victorian taxpayers will pay at least $589 million for nothing and our international reputation as a sport and major events destination been trashed.”

Commonwealth Games Australia CEO Craig Phillips. Picture NCA NewsWire / Aaron Francis

Ms Allan claimed the report had validated the government’s decision not to proceed with the Games.

“The costs were continuing to increase, and we said at the time, and we stand by this today, that $6 billion to deliver a 12 day sporting event was just too much, and it was on that basis, advice also from the Department of Premier and Cabinet and Treasury and Finance, that we made the decision to not proceed ... And the auditor general’s report today confirms that this was the right decision to make,” Ms Allan said.

Commonwealth Games Australia CEO Craig Phillips said the report confirmed “the the gross exaggeration of costs detailed by the then Premier when he made the decision to cancel the 2026 Commonwealth Games.”

“We have consistently indicated our awareness of potential cost overruns because of Government decision making, but our regularly provided advice to make changes to the event delivery model was ignored,” Mr Phillips said.

Mr Greaves made two recommendations to DPC and DTF, based on his finding that government agencies “did not work together effectively to give frank, full and timely advice to the government.”

The first, which was not accepted by the departments, was that they work with the Victorian Public Sector Commission to “conduct a review into why the public sector’s advice to the government on the 2026 Commonwealth Games did not always meet the standards required by the Public Administration Act 2004 and key guidance documents.”

The departments partially accepted the second recommendation, which was that they should ensure key documents for public servants, such as the cabinet handbook and secretaries’ guide for informing and advising ministers, are updated to ensure they provide adequate guidance.