THE SUPPOSED BENEFITS OF THE GRAND PRIX: FALLACIES AND FACTS

• The Economic Benefits?
• The Economic Costs
• The Social and Environmental Costs

The Economic Benefits?

According to the Office of the Minister for Tourism the 1996 Australian Grand Prix generated a "Direct economic benefit of $95.6 million" (Media Release, 9/10/96)
The only direct benefit found by the economic impact evaluation study was the estimated $37.8 million of expenditure by the visitors, media and team personnel.

The rest is assumed benefits such as projected enhanced tourism (visitors who might come as a result of the publicity, etc.), savings spent by Victorians ( e.g. money that might be spent at Christmas time), and money that would have otherwise been spent by Victorian fans in Adelaide if the race had been held there. This last assumption does not take into account. that many would go to Adelaide anyway to visit friends and relatives, and many motor sport enthusiasts would switch expenditure to another interstate event such as Bathurst or to an interstate holiday.

"The NIEIR report ... estimated economic benefits of $555 million for Victoria during the 10 year contract of the race." (Office of the Minister of Tourism, Media Release, 9/10/96)
This is only $55 million per year - what happened to the claimed $95.6 million in 1996?

"The NIEIR report showed gross economic benefits of $44 million for the national economy due to the event moving from Adelaide."' (Office of the Minister of Tourism, Media Release, 9/10/96)
In fact the report can only find additional visitor expenditures of $11.7 million. The Industry Commission and others point out that the competition for major events serves to raise licence fees of Ecclestone and that the staging costs for the Albert Park event are "proportionately higher" for benefits derived at the expense of Adelaide.

"Local government also received $700,000 in receipts from the event." (Officer of the Minister of Tourism, Media Release, 9/10/96)
The Grand Prix cost the City of Port Phillip ratepayers $200,000. The City of Stonnington also suffered an overall loss.

"Ms Asher said the operating loss was more than offset by $6.9 million received by the State Government in tax receipts." (Office of the Minister of Tourism, Media Release, 9/10/96)
The NIEIR report, unlike the 1992 Price Waterhouse report on the 1992 Adelaide GP, provides no details on how these taxes were earned. In fact only $3.6 million was estimated to be received directly in 1995-96 and this did not offset the costs borne by the public sector of $11.2 million.

The fact that the Victorian Government can claim taxes of $6.9 million compared with $ 1.1 million in Adelaide in 1992 is merely evidence of how highly taxed Victorians are under the Kennett Government.

"The 1996 event attracted 401,000 people" (Office of the Minister for Small Business and Tourism Media Release, 7/12/96)
Actually, according to the NIEIR report 197,686 people attended for one or more days. The number of patrons is not the main point. What matters is the number of international and overseas patrons because they are the ones that really help pay for the event. Ticket sales to Victorians are a cost to the economy; the money could have spent on other things. 73% of patrons were Melburnians. This is very different from Montreal, Canada, where only 25% of Grand Prix patrons are from Montreal.

"The Melbourne event ... attracted thousands more interstate and overseas visitors, compared with the average Grand Prix in Adelaide." (9/10/96 Media Release)
The first Adelaide Grand Prix (1985) attracted 138,000 visitor nights. By 1992 the race was attracting only 98,750 visitor nights.

The 1996 Melbourne race was attended by 31,000 visitors but only 16,900 came to Melbourne January 1997 specifically for the race. Only 85,719 additional total visitor nights were generated (Annual Report AGPC 1996), 13,000 less than Adelaide in 1992.

The Economic Costs

"The 1995-1996 annual report of the Australian Grand Prix Corporation ... shows an operating loss of $1.75 million ..." (Media Release, 9/10/96)
The Report of the Auditor-General correctly identified the operating loss in staging the 1996 event as $6.5 million and the total operating cost to the State as $11.7 million excluding capital costs.

"Ms Asher said a range of factors including on-going protester activity and one-off set-up costs caused the 1996 event to fall short of a predicted cash surplus." (Media Release, 9/10/96)
The real reason why the race will not make a profit is the high licence fee that Melbourne paid to bid the event from Adelaide and the high set-up costs of a long temporary racing circuit. Ron Walker was being realistic when he stated "I have never said that we intend to make a profit because I think that's impossible." (ABC TV 7.30 report 14/4/94).

"Formula One had been good for Melbourne" (Media Release, 7/12/96)
The disappointing tourism accommodation figures for March 1996 compared with March 1995 and the month-for month growth in tourism for other months indicates that the event caused a significant avoidance effect.

Australian Bureau of Statistics data suggests that up to 30,000 visitors avoided Melbourne at the cost of over $12 million to the State economy.

"She (Louise Asher) said the capital works program of $47.9 million also included extra costs relating to protesters and security as well as services in the park, poorer ground conditions than originally surveyed and $400,000 for a special floating pontoon bridge.' (Media Release 9/10/96)
This is an admission that Albert Park was the wrong site to choose. The Government disregarded warnings about the unstable soil conditions of Albert Park, ignored community objections, and chose a venue where the movement of spectators is restricted by a large central lake. Ms Asher fails to mention the high staging costs of over $53 million, $20 million higher than Adelaide's in 1995.

The Social and Environmental Costs

"There will not he one inch of parkland lost because of the GP" (Ron Walker quoted in Herald Sun 19/3/94)
Apart from the 18,000 square metre main straight and pit area, and the open space occupied by two emergency underpasses, service roads and an additional 240 metre long, 30 metre wide two storey pit building, Mr Walker could have mentioned the week of total closure and the 17 weeks of setup and dismantling of infrastructure.

"I also confirm the Govemment's previous commitments that..facilities for the Grand Prix will be temporary." (Mark Birrell, Port Phillip Leader, 2/1/95)
These assurances were meaningless. The Park now contains a permanent purpose-built racetrack, including a permanent pit access road and pit garage. It takes 4 months to set up and dismantle the temporary structures which is hardly temporary in its impact on regular park usage.

"With over half a million people expected in the area during the four days of the race, South Melbourne Market will be expecting one of its busiest trading times of the year." (South Melbourne Market Administration, Emerald Hill Times, 7/2/96)
As SAP predicted local business did not benefit overall. Takings at the market were down by over 20%. Over 50% of businesses in the City of Port Phillip experienced a decrease in turnover compared with previous years.

"Having a winding road through the park has been a blessing as these kinks and curves have served to discourage through traffic." (Jeff Floyd, Government Officer, 20/9/95)
Lakeside Drive is the scene of regular single vehicle accidents. 40 accidents have been recorded on the so-called park roads since their re-opening on 22 May 1995.

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