Ernst & Young stands by its contribution to the business case for Victoria’s axed 2026 Commonwealth Games, a partner of the firm says, after the premier, Daniel Andrews, labelled the business case “hardly the greatest piece of work”.
Representatives for the consulting firm on Monday faced a federal inquiry that is investigating the event’s cancellation, with senators travelling to Melbourne to hear from witnesses including regional councils and Commonwealth Games Australia organisers.
Dean Yates, a partner at EY, told the Senate inquiry that consultants had undertaken assessments for major events such as the Melbourne Grand Prix using the “same framework” it applied to the Commonwealth Games business case.
“We stand by the work we did to assist with the development of the business case,” he said.
Andrews last week conceded the original business case and costings for the games were “hardly the greatest piece of work”.
The government this month announced it had reached a $380m settlement with Commonwealth Games organisers to cancel the event after the forecast costs of hosting the event blew out from an estimated $2.5bn to almost $7bn.
In a tense exchange during the inquiry, Liberal senator Sarah Henderson questioned the EY representatives about the assumption in the original business case – released by the state government last weekend – that the federal government would contribute more than $200m to the event.
Henderson pressed Yates about what assumptions underpinned the expected $200m contribution from the federal government. Yates said the federal contribution was “an assumption that we took at face value”.
Leigh Walker, another partner at EY, said she could not answer the question because it could reveal confidential cabinet information. Walker also declined to disclose how much EY was paid to contribute to the business case.
The federal government had not committed to any contribution to the Commonwealth Games before the Andrews government announced its cancellation.
Yates said the consulting firm’s ability to provide a thorough cost estimate of the Games had been constrained by the Victorian government wanting to keep early discussions about the games confidential.
“Given the confidential nature of this project, the discussions were confined to a core project team of key stakeholders and did not involve sporting organisations, venue operators and other government departments or the commonwealth government,” he said.
“It meant that we were estimating preliminary costs because the ability to verify those things was limited given the constraints that we had.”
The former Victorian sports minister, Martin Pakula, also faced the inquiry on Monday and defended a conversation he held with the Morrison government in 2022 over federal funding for the Commonwealth Games.
The Age reported last week that Pakula, who was Victoria’s sports minister when the event was announced, had indicated to the federal government last year that Victoria did not need additional funding to secure the event.
Pakula said he made his comments because at the time the Victorian government was committed to proceeding with the event regardless of whether or not it had commonwealth support.
“There is a significant difference between asking or not asking for money now versus not asking for money ever,” he said.
“We were not going to be in a position to wait for an answer from the commonwealth given the timelines of the bid process and the announcement.”
Commonwealth Games Australia organisers told the inquiry that the sporting body was focused on trying to find another host for the event and were hopeful it could still be held in Australia.
Basil Zempalis, the lord mayor of Perth, on Monday told the inquiry it was unlikely the West Australian capital could host it because the state government did not believe it would deliver a return on investment.
Tom Tate, the Gold Coast lord mayor, said there was a chance the city could still host the 2026 event.
But Anthony Albanese has previously dashed Tate’s hopes of commonwealth funding, saying the federal government was focused on the 2032 Olympics and Paralympics in Brisbane.
Zempilas and Tate previously called for Perth and the Gold Coast to co-host the 2026 Commonwealth Games after Victoria cancelled the event.
