During the
very week that the Gold Coast was hosting another Indy Carnival – like
clockwork up popped Australian Grand Prix chairman Ron Walker, yet again proselytizing on the huge financial
contribution his race makes to Victoria.
But in running out the latest set of figures last week, he merely maintains the
continuing discredited practice of major event “voodoo economics”.

According to a
independent study, the National Institute of Economic and Industry Research found the 2005
Albert Park event made a $174.8 million contribution to the Victorian
economy. However, this is no indication
whatsoever as to any net return to the state purse after the Grand Prix
Corporation’s 2004 annual report shows it cost $63.6 million to stage that
year’s race and Bernie Ecclestone’s F1 sanctioning body received in excess of
$14 million merely for the right to host this year’s event. The 2005 race costs will be tabled in
Parliament next month.

Since the
likes of Crikey and notably The Age’s Kenneth Davidson have
discredited the misleading “economic impact” and a variety of dubious indicators
to justify huge government subsidies and expenditure of major events including
most notably the 2006 Commonwealth Games, we now get the catch-all
“contribution”. This is in effect a
ledger of all monies expended as part of the event, but it takes no account of profit or loss, and
with this kind of economic rationale there are no swings – only a roundabout
where a significant sum of such expenditure might as well be going round in
circles?

Along with the
irascible Save Albert Park group – we will only be satisfied with a legitimate
cost benefit analysis that can determine as SAP says “the actual economic
benefit to the state – that weighs
the economic impact against the costs of providing services to visitors and all
the costs of staging the event”?

For instance
Ron Walker claims this week that 32,000 interstate and 23,000 overseas visitors
attended this year, but with regard to such visitors, did they come purely for
the race or just happened to be here at the time? In other words many of these people would
have spent discretionary money in Victoria regardless.

I would argue
without knowing precise numbers that the Gold Coast Indy attracts far more
genuine visitors than the Melbourne race which is the primary basis for judging
the success or otherwise of the Government’s support of such events with
taxpayer dollars. But then maybe the
National Institute of Economic and Industry Research has an answer for that too.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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