Australia: The Victorian Government to pay $380m in compensation to Commonwealth Games bodies for 2026 Games cancellation


The Victorian Government has agreed to pay Commonwealth Games bodies $380m in compensation after canceling the 2026 event, in what the Premier of Victoria, Daniel Andrews, is claiming as “the best outcome” the State could get.

The Games are currently without a host. Victoria, Australia was initially announced as the host in April 2022 after two months of an exclusive dialog process with the Commonwealth Games Federation (CGF). However, on July 18th, 2023, Victoria announced it had canceled its plans to host the Games, citing an escalation in its cost projections relative to initial estimations.

London (UK)-based the Commonwealth Games Federation, currently known as Commonwealth Sport, is the international organization responsible for the direction and control of the Commonwealth Games and Commonwealth Youth Games, and is the governing body of the Commonwealth Games Associations.

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).

Following confidential “good faith” discussions, Victoria agreed to pay the three parties a total of $380m.

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

Appointed as mediators in the process were the former New Zealand judge Kit Toogood KC and the former Chief Justice of the Western Australia Supreme Court Wayne Martin AC KC.

In canceling the regional Victorian Games on July 18th, Andrews cited a forecast rise in cost from $2.6 bn to between $6 bn and $7 bn.

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

Andrews had repeatedly said he would not spend up to $7bn to host the event and dismissed the idea of moving the Games to Melbourne (Australia), which he said would still have cost more than $4bn.

Andrews reiterated his view that the “enormous costs” of hosting the games would “far outweigh the benefit”.

He said paying the compensation was the best of three options available to the Government, rather than spending billions on hosting the Games or pursuing a prolonged legal fight in foreign courts and the costs associated with that “lawyers’ picnic”.

A newly released costings document estimated the extra cost pressures at about $2bn, 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 $200m to well over $1bn.

The document stated, “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. Also putting pressure on the event, according to the new costings, was an estimated general operations price tag of close to $1.5bn, up from an initial $1.1bn. Transport costs surged from $110m to over $300m, while potential police and security spending ballooned to almost $500m compared with early estimates of $200m.”

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

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