Criticism of Commonwealth Games Costings: ‘You Get What You Pay For’

A consulting giant hired to analyze Victoria’s bid for the Commonwealth Games did not thoroughly review the provided costings.

A lengthy investigation into the failed 2026 Games resumed public hearings on Aug. 9.

The unsuccessful event was canceled in July 2023 due to a significant cost overrun.

Audit-General Andrew Greaves found that the business case for the regional Games, prepared by the Department of Jobs, Skills, Industry, and Regions, did not provide enough information for the government to make informed cost decisions.

The department enlisted KPMG to evaluate the economic impacts of hosting the event based on projections from consulting firm EY.

During the inquiry, KPMG principal director Michael Malakellis revealed that the 22-page report, completed within four weeks, cost approximately $55,000 (US$36,100).

Liberal MP and committee member David Davis likened the model to a “black box.”

Malakellis acknowledged, “Rubbish in, rubbish out … you’ve been provided with information on which you had to rely.”

The senior economist admitted that KPMG had no certainty about the validity of the estimates.

KPMG’s work was previously described as a peer review of the business case, but risk management partner Marcus McArdle mentioned that it would require delving into the inputs.

The auditor-general concluded that the business case relied on “desktop research” of previous Games’ costs, failing to consider Victoria’s multi-city model and tight deadline adequately.

Academic Ana Delevska, part of a team that analyzed the canceled Games independently, criticized the review for lacking basic information.

“If a student submitted this as an assignment, missing these aspects, they would fail,” mentioned Melbourne Polytechnic lecturer Delevska.

In response, department secretary Tim Ada explained that the business case was completed under significant time pressure to meet the deadline set by the Commonwealth Games Federation for the Birmingham Games.

In early March 2022, Ada’s team urged then-Sports Minister Martin Pakula to seek government approval for a Games budget of up to $3.2 billion (US$2.1 billion).

Pakula approved a submission recommending that amount on March 10, but the final version sent to the government advocated for a $2.7 billion (US$1.8 billion) budget.

Ada was unable to justify the discrepancy.

“This is the original sin,” stated Davis.

Although the Commonwealth Games Federation planned to announce a replacement host for the 2026 event in May, no announcement has been made yet.