Victoria’s decision to host and then abandon the 2026 Commonwealth Games has cost the state almost $600 million – a waste of taxpayer money that could have been avoided were it not for substandard public sector advice given to the state government.
That’s according to a scathing new report by the state’s auditor-general’s office (VAGO) that was released this morning.
It also says the original business case, put together by the Department of Jobs, Skills, Industry and Regions (DJSIR), wasn’t accurate, and instead inflated the potential benefits to the state and downplayed how much it would cost.
“The government relied on DJSIR’s business case when it decided to host the Games and determined the budget,” VAGO said.
“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 (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.
“DPC and DTF consistently raised 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.”
When it announced it was hosting the Games and April 2022, the Victorian government said it would cost $2.6 billion, only for then-premier Daniel Andrews to say that figure had blown out to almost $7 billion after the state backed out as hosts last July.
VAGO said that figure was inaccurate and glossed over an existing $1 billion budget allocation.
“The cost estimate for the Games that the government publicly released in August 2023 of $6.9 billion was overstated and not transparent,” it said.
“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.”
VAGO said the government should have said the cost of the Games had instead risen to $5.9 billion.
The report made two recommendations to the Department of Premier and Cabinet.
The first is that it conduct a review with the Victorian Public Sector Commission to establish why the advice government received was substandard, while the second is focused on ensuring the public sector can properly provide “frank, full and timely advice”.
DPC has rejected the first recommendation, and only accepted the second in part.
A replacement host for the 2026 Games is yet to be found, although Malaysia has emerged as the frontrunner to take the event off Victoria’s hands.
