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Victoria to pay $380 million for Commonwealth Games cancellation

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Victoria to pay $380 million for Commonwealth Games cancellation
The Victorian Government has reached a confidential settlement with the Commonwealth Games Federation after the state suddenly pulled the plug on hosting the event in 2026.

The Games Federation and the state government released a joint statement which highlighted the secrecy of the negotiations, with both parties “legally bound not to speak further regarding the details of the settlement”.

The statement did reveal that the regional nature of Victoria’s proposed Commonwealth Games was believed by both parties to be “more expensive to host than the traditional models”.

When Victoria entered into exclusive negotiations to host the Games in early 2022, Andrews hailed the vision for a regional model as “a Games like no other” and called Victoria’s ambition to take on the event as “a profound investment in tourism, in jobs and in regional Victoria”.

Alongside the top line compensation figure, the Victorian Government has released its original and updated costings for hosting the Commonwealth Games, which show a particularly stark difference between the original worst case scenario cost expectations and figures from last month for the athletes villages, police and security and transportation.

The anticipated cost of athletes villages had jumped from a worst case scenario of $250 million to 1.023 billion – an almost 500 per cent increase. In the costings, the government attributed this to the Commonwealth Games Federation’s “strict conditions placed on the location of the athletes’ villages” which resulted in “limited land” being available to build the villages.

“The requirements for housing during the Games, as compared to after the Games, and land not being suitable at this time for permanent housing in Ballarat means that it was necessary to shift to building a high proportion of temporary demountable structures, which significantly reduced any potential private sector interest,” was the reasoning outlined in the most up to date costing document.

Police and security costs had risen from $201 million in the original business case to $492 million in July 2023, which expected transports costs had soared from $110 million to $306 million.

The government had also included a new cost line in July called “additional cost pressures” which it estimated to be just over $2 billion – well over two thirds of entire originally forecast budget of $2.6 billion – and attributed to compressed timelines for delivering the event causing “hyper-escalation” of costs, regional supply costs, broader inflationary pressures, lack of accommodation in regional areas and the costs of displacing Victoria’s existing sporting events from their venues.

Victoria’s Commonwealth Games is the subject of two Parliamentary inquiries – one at state level and at federal level.

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