The most pressing question about Victoria’s cancellation of its Commonwealth Games is why the government judged hosting them to be a good idea in the first place – and why it got it so wrong.
There are now good reasons to worry about the judgment and capacity of the government – both the public service and its most senior ministers.
In recent weeks, it was becoming clear that the state was heading for a train wreck, with real questions about whether the infrastructure could be built on time, let alone to budget.
Doubtless there will be dispute about the costings, but the premier’s claim that they had blown out to $7bn is not inherently unlikely.
Rather, it is evidence of how fevered and odd things are in the construction industry – partly as a result of the government’s own actions.
The Victorian Civil and Administrative Appeals Tribunal has accepted evidence that delays in building projects of just two years cause an incredible 25% increase in the costs.
There is construction everywhere in Victoria now – there are road and rail projects, including the metro tunnel, level crossing removals and the West Gate Tunnel, as well as school upgrades.
According to the Master Builders Association, entry level tradies working on the tunnel projects are able to get wages of about $120,000 a year. More experienced hands get $200,000.
Yet the government decided just 16 months ago that, rather than using existing Melbourne venues for the Games, it would build new ones in the regions. That was always going to be challenging.
There are also questions about the competence of those managing the process.
A construction company that considered tendering for the planned new aquatic centre near Geelong says it withdrew its bid in the early stages due to “all the weirdness”.
The project brief, issued last year, required the successful contractor to build three pools. After the Games, it was to enter “legacy mode” and “remove” two of the pools, and then construct a community pool and several sports courts.
This virtual rebuild was said to be needed to meet the “vision” of the City of Greater Geelong for the site.
Yet it is understood that the council’s preferred option was for the government to upgrade the existing Kardinia Aquatic Centre. Nobody seems to know why that option was not taken up.
In the last week or so, many of the tender processes were entering a reality check, with shortlisted companies required to submit their detailed bids.
Updated documents for the athletes’ villages were released just last Friday. The more detailed process for the Geelong aquatics centre was due to start on Tuesday.
Services such as security and transport were also blowing out as the detailed tender processes progressed.
The next stage would have been to sign the big contracts. The government was forced into a difficult decision.
Andrews has committed to building much of the sporting infrastructure in any case, but presumably the deadlines will be longer, and it will be done without the “build then repurpose” or even “build and demolish” craziness.
So why did the government commit to this process just sixteen months ago, when at least some of the problems should have been predictable? Why was the original costing apparently accepted? And why was the process from then not better managed?
Prof Robert Brooks of Monash University’s Department of Econometrics has a particular interest in the costs and benefits of major sporting events.
He understands the appeal of hosting the Games in the regions, with the opportunity to showcase Victoria and build long-lasting infrastructure.
“There’s an enormous benefit to hosting if you do it well,” he says.
The “poster child” for success in reaping long term gains from major sporting events is the Barcelona Olympics in 1992, he says, where the event was used to drive rejuvenation of the city and its infrastructure. Victoria wanted to adopt “a Barcelona approach” for the regions.
But a regional approach was always going to be more expensive than using existing venues in Melbourne.
“Estimating the cost of any new build is always difficult and it’s very clear that supply chain and pandemic related construction issues have made that more challenging,” Brooks says.
“The interesting question is whether there was a spectrum, and whether a hub-and-spokes model making some use of existing venues in Melbourne might have been better.”
On Wednesday, Andrews reiterated that running the games in Melbourne had been considered before the decision was made to cancel, but the budget would still have blown out.
The director of the Grattan Institute’s transport and cities program, Marion Terrill, has suggested that the cancellation of the Games should be followed by the scrapping of other projects, in particular the suburban rail loop.
But Brooks rejects any simple comparisons. Big spending on roads and rail, he says, requires sophisticated cost benefit analysis, with benefits both economic and social spread over a long time period, he says. The counter factual – what the city will be like in decades to come without new infrastructure – also must be considered.
By the time Andrews faced the music on Tuesday and announced the cancellation, he was running out of options.
Every development in the tendering process was bringing to light more cost, and more problems. He wasn’t lying when he said he couldn’t guarantee that even the blown-out figure of $7bn might not hold.
In a state with so much infrastructure under construction, there are good reasons to worry about how the whole process was managed, how decisions were made, and why they were not revised earlier.
Finally, how are we to understand the role of Andrews’ deputy and likely successor as premier, Jacinta Allan? She is the minister for transport and infrastructure, and the minister for Commonwealth Games delivery. She is also the MP for Bendigo East – one of the areas most set to benefit had the Games gone ahead.
We need to know what her role was. Was she involved in the original decision to host the Games as a regional only event, in the management of the process to build the venues and contract the services, and in the decision to cancel? How are we to understand her capacity for judgment and management?
Did she push the regional model for the Games? Or was it she who made it clear to the premier that the Games were heading for disaster, and he had run out of options?
The answers to those questions may take years to emerge but will have big implications for the future of the state and its government.
Margaret Simons is an award-winning freelance journalist and author. She is also an honorary principal fellow of the Centre for Advancing Journalism and a member of the board of the Scott Trust, which owns Guardian Media Group.
