Andrews Calculated Only Political Cost Of Scrapping Commonwealth Games

Written by:
18 July 2023
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In this article, John Roskam contextualises and disseminates the findings of the IPA’s research into Victoria’s level of national debt and how that affects Victoria’s economic freedom and prosperity. The IPA has been dedicated to preserving and strengthening the foundations of economic freedom through research and analysis since its inception in 1943.

Regardless of the cost overruns, if the state government felt it needed to stage the Games to win the next election, it would have done so without hesitation.

As the premier of Victoria, Daniel Andrews is the most calculating of his generation and he operates the best political operation in Australia since Neville Wran. Andrews has a personal and political staff of nearly 100 people, twice as many as that of the prime minister.

Regardless of the extent of the Commonwealth Games cost overruns, he wouldn’t have cancelled them if there was no political advantage to be gained.

The key thing those outside Victoria need to understand about the state and its government is that not much of what Andrews says can be taken at face value. His claim that the Games were cancelled because they could end up costing more than $6 billion, twice what was originally anticipated, might have some truth to it. But Victoria being Victoria, there’ll be more to the decision than just money.

The cost of budget overruns on the government’s big building projects in the state is already approaching $30 billion. So, for an administration that until now has shown scant regard for the condition of the state’s finances, another $3 billion blowout for the Commonwealth Games would be neither here nor there.

If the Andrews government felt it needed to stage the Commonwealth Games to win the next state election in 2026, it would do so without hesitation.

What we know about how the government operates is that it’s made an assessment that the premier declaring he wouldn’t “take money out of hospitals and schools” for the Games provides a better electoral dividend than actually having the Games. Most likely, that’s what his polling has told him.

In 2014, Andrews won his first election after promising to cancel an agreement for a $7 billion road project committed by the previous Liberal government. He said “some modest compensation” might be paid but “the contracts are not worth the paper they’re written on”. His government terminated the deal for $642 million and the Victorian auditor-general concluded that the total cost to taxpayers of scrapping the project was $1.1 billion.

If there’s one thing potential investors will know about Victoria, it’s that it cancelled a sporting event because it ran out of money.

Victorian Labor’s political horizon stretches into the decades. Andrews’ political donation laws strangled teal and right-leaning independents at last year’s election and his 60-kilometre “Suburban Rail Loop” to be built over the next quarter of a century will permanently change Melbourne’s political geography as the few seats the Liberals still hold in the city’s middle-class eastern suburbs will be lost to public housing and high-rise buildings with rental apartments.

Cancelling the Commonwealth Games is undoubtedly embarrassing for Andrews, but with an election three-and-a-half years away, a record parliamentary majority, and the Melbourne media still largely sympathetic to his government, being embarrassed is a minor concern.

In any case, there is the satisfaction the ALP left will enjoy in knowing that Andrews has almost certainly ended one of the remaining vestiges of British colonialism, something that once had “Empire” in its name.

None of which is to say the decision to abandon the Commonwealth Games won’t have consequences.

As the aftermath of COVID-19 recedes, Victorians will eventually turn their mind to the state budget and they’ll have something concrete to point to as a real-life example of the impact of what will soon be a decade of financial mismanagement.

The fiasco of the Commonwealth Games might get Victorians to realise their state is in a worse financial situation than even under Joan Kirner in the early 1990s.

The then Victorian government’s net debt was 16 per cent of gross state product. It’s currently 20 per cent and by 2026, it will reach close to 30 per cent. The difference between now and 30 years ago is that there are few public assets remaining to be sold to balance the books. Victoria’s taxes are already the highest in the country and there’s no prospect of that changing in the foreseeable future.

Any observers from outside the state will look at what the government did to the Commonwealth Games and ask themselves whether Victoria is the sort of place in which to do business.

You can be sure that in future, if there’s one thing potential investors will know about Victoria, it’s that it cancelled a sporting event because it ran out of money.

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