MELBOURNE (Reuters) - The government of the Australian state of Victoria overstated the costs of staging the 2026 Commonwealth Games when it pulled out of hosting the multi-sports event last year, the state's auditor-general said in a report on Wednesday.
Then state Premier Dan Andrews said last year that the cost of the Games, which were to have been held in four regional hubs, could blow out to nearly A$7 billion ($4.57 billion) from a budgeted A$2.6 billion if they went ahead.
"The cost estimate for the Games that the government publicly released in August 2023 of $6.9 billion was overstated and not transparent," the Victorian Auditor-General's Office (VAGO) said in the report.
"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."
The report said the original budget estimate had been "unrealistically low" and various agencies had failed to work together to give the government proper advice on costs.
The report said the abandoned Games had still cost the state A$589 million "with no discernible benefit", including A$380 million to the Commonwealth Games Federation (CGF) in severance fees.
"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 report said.
Commonwealth Games Australia chief Craig Phillips said the report confirmed the "gross exaggeration of costs", adding that the government had ignored their advice over how the Games should be delivered.
"A Games that celebrated regional Victoria, First Nations Australians and a green and gold team competing on home soil was not out of reach had there been greater collaboration to identify cost mitigation strategies," he said in a statement.
"The decision to cancel is a missed opportunity for the people of this once proud major event state."
Victoria's withdrawal placed the future of the quadrennial event for mostly former British colonies in doubt and raised questions about the benefits and continued relevance of the Games.
There is still no host for the 2026 Games, although Malaysia is mulling staging a downsized version. The CGF has offered any city willing to host the event $100 million from Victoria's severance penalties.
($1 = 1.5305 Australian dollars)
(Reporting by Nick Mulvenney in Sydney, editing by Peter Rutherford)
