Victoria to pay $380m to Commonwealth Games for cancelled event

Premier Daniel Andrews made the shock announcement last month that Victoria would not host the Games as planned due to concerns they would far exceed initial cost expectations.

Following the announcement, mediation was launched between the State of Victoria, The Commonwealth Games Federation (CGF), Commonwealth Games Federation Partnerships (CGFP), and Commonwealth Games Australia (CGA).

Lawyers for the state government travelled to London last month to negotiate what the cost would be for terminating the contract.

Following confidential "good faith" discussions, Victoria agreed to pay the three parties a total of $380 million.

"All parties engaged respectfully and made appropriate concessions in order to reach an agreement," the groups said in a joint statement.

"The settlement finalises all matters between the parties."

Appointed as mediators in the process were former New Zealand Judge, the Honourable Kit Toogood KC and the former Chief Justice of the WA Supreme Court, the Honourable Wayne Martin AC KC.

In cancelling the regional Victorian Games on July 18, Mr Andrews cited a forecast rise in costs from between $2 billion and $3 billion to between $6 billion and $7 billion.

During mediation the Commonwealth Games parties also agreed that the multi-hub regional model was more expensive to host than the traditional models.

Mr Andrews has repeatedly said he would not spend up to $7 billion to host the event and dismissed the idea of moving the Games to Melbourne, which he said would still have cost more than $4 billion.

A newly released costings document estimated the extra cost pressures at about $2 billion, citing compressed timelines, supply constraints, accommodation shortfalls and major sports code displacement costs.

Requirements by the Commonwealth Games Federation for athletes' villages saw the cost of accommodation alone jump from an estimated $200 million to well over $1 billion.

"The requirements for housing during the Games, as compared to after the Games, and land not being suitable at this time for permanent housing in Ballarat means that it was necessary to shift to building a high proportion of temporary demountable structures, which significantly reduced any potential private sector interest," the document stated.

Also putting pressure on the event according to the new costings, was an estimated general operations price tag of close to $1.5 billion, up from an initial $1.1 billion.

Transport costs surged from $110 million to over $300 million, while potential police and security spending ballooned to almost half a billion dollars compared to early estimates of $200 million.

State and federal inquiries have been set up to investigate the cancellation of the 2026 Games.

Mr Andrews and former Games delivery minister Jacinta Allan have both been called to appear before the federal inquiry, but cannot be forced to do so.

Committee member and Nationals senator Bridget McKenzie said earlier this month Commonwealth Games Federation president Dame Louise Martin and chief executive Katie Sadleir would also be called on to give evidence.

Australian Associated Press