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to the taxpayer
Mr Kennett said Victorian taxpayers would not be asked to meet the cost of the event, with the State Government only prepared to act as guarantor for loans required to establish the race." (Herald Sun, 18/12/93).
"...the GP will expose Melbourne to a world audience of 600 million for the next 10 years, all from a capital outlay of $15-$20 million." (Ron Walker quoted Herald Sun, 19/3/94).
"Ms Judith Griggs said that, when Mr Walker was making Melbourne's Grand Prix bid early in 1993, it was very difficult to obtain accurate information from Adelaide about the real costs of holding a Grand Prix. It was only later, once Melbourne had secured the Grand Prix, that Mr Walker discovered that the SA Government had squirreled away costs associated with hosting the event in a myriad of Government departments." (The Age, 20/5/94).
"Mr Walker has also told Mr Stockdale that if the Government charges his Grand Prix company any interest or debt financing on this capital cost, it will be unable to break even, let alone create a profit, on the staging of each annual Grand Prix event." (The Age, 20/5/94).
Identified Government Capital Costs As At 30 June 1999
The following Government expenditures have been identified from a variety of sources. Save Albert Park has no certainty that these are a comprehensive accounting of all costs.
| TOTAL | 1998 - 99 | |
| Race infrastructure (barriers, stands, etc.) | $20,911,510 | $664,950 |
| Track, pit garages, mounds and other works/items | $35,608,587 | $160,812 |
| Public Transport Corporation GP-related works | $1,600,000 | |
| VicRoads - Albert Park road works | $2,940,000 | |
| SUB-TOTAL | $61,060,097 | $825,762 |
| TOTAL | 1998 - 99 | |
| Estimated GP - related costs incurred by Parks Victoria (trees, road works) | $1,550,000 |
| TOTAL | 1998 - 99 | |
| TOTAL GRAND PRIX CAPITAL COSTS | $62,610,097 | $825,762 |
1. Since 1998-1999 neither the AGPC accounts nor the report of the Auditor-General have apportioned capital expenditure on race infrastructure between the Formula One GP and the 500cc Motorcycle GP. Based on the proportion of revenues contributed by and temporary infrastructure required by the two events, 80% of moneys expended by the AGPC on race infrastructure has been allocated to the Formula One GP.
2. AGPC expenditure on all capital works in Albert Park was recognised as a community resource cost in the AGPC-commissioned NIEIR 1996 economic impact study and used to calculate the opportunity costs of the event. These costs are over and above the upgrade costs on which Parks Victoria, lessees and Department of Major Projects have spent another $95 million.
3. The Public Transport Commission expenditure on light rail and works was designated as "Grand Prix-related" in the budget papers.
"Ms Judith Griggs said that, when Mr Walker was making Melbourne's Grand Prix bid early in 1993, it was very difficult to obtain accurate information from Adelaide about the real costs of holding a Grand Prix. It was only later, once Melbourne had secured the Grand Prix, that Mr Walker discovered that the SA Government had squirreled away costs associated with hosting the event in a myriad of Government departments."
(The Age, 20/5/94).
Operating Costs Borne By the Public Sector as at 30 June 1999
"Mr Walker has also told Mr Stockdale that if the Government charges his Grand Prix company any interest or debt financing on this capital cost, it will be unable to break even, let alone create a profit, on the staging of each annual Grand Prix event." (The Age, 20/5/94).
Public sector expenses which are not reported by the Auditor-General are (i) government expenditure on corporate entertainment; in 1997 Business Victoria and the Premier's Department alone spent $274,000; (ii) past and current Commonwealth and local government net contributions to the staging of the event. Melbourne City Council, recognised as a sponsor, contributed $80,000 in 1998; (iii) expenditure by Parks Victoria.
There are three known major hidden costs and subsidies:
1. Depreciation costs of the track and pit garages are carried by Parks Victoria.
2. No capital assets charge or interest on the funds invested by government is charged against the event. 8% would represent a conservative rate of return on the funds invested.
3. The AGPC does not pay a commercial rent for the Park (valued at $403 million).
- Public Sector Operating Costs Reported by Auditor-General
TOTAL 1998 - 99 AGPC operating deficits $18,871,449 $3,995,588 AGPC depreciation costs (see note) $10,372,656 $1,180,361 Public sector sponsorship (see note) $4,188,000 $460,000 Contributions by State Govt. agencies $1,239,300 $50,300 Other costs inclu compaction damage compensation $1,829,470 SUB-TOTAL $36,500,875 $5,686,249 - Other Estimated Operating Costs Based on FOI and Government Sources
TOTAL 1998 - 99 Government corporate hospitality (est.) $1,000,000 $250,000 Net costs incurred by local councils 1996-99 $776,968 $155,000 Parks Victoria depreciation costs 1996-99 $5,300,503 $1,300,000 Parks Victoria - GP liaison officer's salary $312,361 $44,460 Department of Defence (fly overs) $747,000 $178,000 SUB-TOTAL $8,136,832 $1,927,460 TOTAL 1998 - 99 TOTAL ESTIMATED PUBLIC SECTOR OPERATING COSTS $44,637,707 $7,613,709 - Estimated Interest on Funds Invested (8%)
TOTAL 1998 - 99 Estimated Interest on Funds Invested (8%) $31,356,597 $6,665,014 TOTAL 1998 - 99 TOTAL ESTIMATED PUBLIC SECTOR OPERATING COSTS $75,994,304 $14,278,723
Note
The Report of the Auditor-General does not allocate public sponsorships or depreciation between the Formula One and 500cc
Motorcycle Grand Prix events. Based on the relative revenues and costs of the two events, 80% has been allocated to the Formula One Grand Prix.
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