Thursday, May 24, 2007

State Government funding of 'special events'

Billionaire Bernie Ecclestone threatens to take the Formula 1 Grand Prix away from Melbourne unless it runs the races at night. This is apparently because Ecclestone wants to see the live TV coverage in Europe. The current contract runs out in 2010.

It has never been made clear what Victorian taxpayers contribute to Ecclestone to stage the Grand Prix here in Melbourne – the size of the fee is private information although for the life of me, as a taxpayer, I cannot understand why any government should agree to this. Currently Ecclestone is negotiating with Valencia, Spain to run a single annual event there and this gives some idea of the transfers being made to Ecclestone:

Valencia's Partido Popular has agreed to pay €26 million ($42.2 million) a year for the rights to hold a F1 event, which might give a good indication of what Melbourne
will have to fork over.

Gulp. One does not know the size of the public component of this transfer although the overall public subsidy for the Grand Prix was $21 million last year. It is forecast to be close to $30 million this year We also know that $66 million is allocated in the 07/08 Victoria budget towards tourism promotion. A further $34.2 million is allocated to Special Events promotion in the State over the next 4 years. The Victorian Auditor General has called for more analysis and less spin in assessing benefits from these events.

Mr Bracks seems unwilling to give Mr Egglestone what he wants. Opposition Leader Ted Baillieu wants the Grand Prix retained on terms which accord with Mr Ecclestone’s desires. Excuse me but, as a supporter of the conservatives, I feel ill. If you are making a loss on a dumb deal and the party making the gain threatens to take the loss away from you, well....

A report was tabled yesterday in the Victorian State Parliament that examines benefits from the 2005 Grand Prix event. It claims that overall Victoria made a loss from the Grand Prix and that the Government had overstated benefits frtom the event by more than $100 million. It also claimed that that the methods used by the National Institute of Economic and Industry Research to assess the economic impacts of the report were questionable.

‘Key to the differences between the Auditor-General's figures and those of the National Institute of Economic and Industry Research are projections of full-time employment created by the grand prix.

The institute estimated these at 3600, while the Auditor-General’s report suiggested the event would create between 400 and 600 jobs. Tourism revenue from the event was $9.1 million according to the institute, but the Auditor-General found it was of uncertain value’.
Disclosure: I provided input to the Victorian Auditor-General’s Report. I think the Auditor General's report is a fair one and a valuable input.

1 comment:

conrad said...

I wish him good luck. It would be nice to see the end of it.