Commonwealth Games organisers were unaware of external consultants’ involvement in estimating the costs of the 2026 event until the Victorian government made the shock announcement that it was being cancelled.
It’s understood that organisers were last month told by the government that the original cost of the 2026 Games, which were to be held across five regional Victorian sites, had grown from an initial $2.6bn to about $4bn.
The Andrews government on Tuesday said the 2026 Victorian Games would be cancelled due to the costs rising to more than $6bn – and as high as $7bn. It would instead deliver a $2bn package to support regional communities affected by the decision.
But the Commonwealth Games Australia (CGA) body slammed the government, saying forecast cost rises were a “gross exaggeration” and not reflective of figures provided to its organising committee board last month.
One member of the organising committee’s board, who requested anonymity, said that as of last month, the possibility of a federal government investment was also still being canvassed.
“There was certainly hope for that but that’s where it didn’t work out,” they said.
Multiple industry and government sources have confirmed that a big four consulting firm was responsible for the $2.6bn cost estimate.
Last month, the Victorian government provided an updated operational budget – believed to be about $4bn – to the Commonwealth Games body, according to a source close to the organising committee.
“That number was presented and the recommendations made around reducing costs were ignored by the Victorian government,” they said.
The source said the independent cost estimation, including the financial analysis used to determine the cost blowout, had not been shared with the CGA.
“How were they establishing the costs, if they don’t know what’s expected?” they said.
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In a statement, the Commonwealth Sports Movement said the $6bn figure was 50% higher than the costs outlined by the Victorian government last month.
Craig Phillips, the chief executive of CGA, said the government had ignored its recommendations made to reduce costs, including by moving events to purpose-build stadiums in Melbourne.
On Tuesday the premier, Daniel Andrews, said hosting all events in metropolitan Melbourne would have cost at least $4bn and that the government canvassed other options – all of which exceeded $2.6bn.
When asked when he first learned that the cost was estimated to be more than $6bn, Andrews said: “There’s been a cabinet process and cabinet committees and others over recent days.”
“We’ve made this decision in good time because … there is a narrow window when we’ve got all of our cost estimates and market soundings and a clearer picture of what it would cost, but no major contracts have been signed,” Andrews said.
“[The expenditure review committee] ERC and cabinet only made these decisions yesterday.”
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Phillips said the government was “wedded” to delivering the games in regional Victoria, which involved higher infrastructure costs.
He said the first mention he heard about the $6bn figure was via a phone call with a senior bureaucrat on Tuesday morning.
The deputy premier and minister for Commonwealth Games delivery, Jacinta Allan, hit back at Phillips’ claim the cost blowout was exaggerated.
She told ABC radio the government was responsible for the total costs of running the event, while the organising committee was focused on the sporting side.
Andrews said the negotiations with the federal government had nothing to do with the cancellation, saying “our ask was 50-50, but not 50-50 at any price”.
He said the cost estimates were based on “market soundings”, consultation with industry and pre-tender work.
Jeroen Weimar, the chief executive of the Victoria 2026 Commonwealth Games organising committee, said the cost blowouts were not on his radar last year.
“That picture [of cost increases] has been emerging over the last few weeks, over the last few months,” he said.
On Friday, government tenders for the Commonwealth Games were still being published online.
It is unclear what costs Victoria will face for terminating the Games. Andrews has vowed to get the “very best deal for taxpayers” in negotiations.
Victoria’s debt is predicted to rise from more than $135.4bn next year to more than $171bn by 2026-27.
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2023-07-18 21:01:00Z
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