While controversy over the Victorian Government’s decision to pay Tiger Woods $1.5 million to tee off at Kingston Heath in November has begun to die down, questions over the $19 million in alleged “economic benefits” that premier John Brumby claims will be injected into the state’s economy are likely to linger long after the world number one has returned to the clubhouse.

Last week’s page-one Herald Sun splash of Tiger in full-flight ignited outrage from opposition leader Ted Baillieu and the paper’s readership didn’t seem overly impressed either, with two-thirds of respondents to a subsequent poll rejecting the government’s $1.5 million cheque as a waste of cash. The controversy has even gained traction overseas, with a scathing opinion piece in the UK Telegraph sinking the hatchet into Brumby, with a savage write-off linking Woods’ $3 million payment to “impoverished, burnt-out” state still struggling in the wake of the bushfire crisis.

So how was the $19 million “economic benefits” figure arrived at? In a press conference called to announce the Woods cash, major events minister Tim Holding cited an Ernst & Young study that claimed to calculate the extra dosh spent by “10,000 or 20,000 extra visitors”. Unfortunately, the government has repeatedly refused to release the report, claiming that would give an advantage to Victoria’s competitors.

The closest the public got to an explanation was this garbled statement from Holding:

We had a study commissioned by the Victorian Major Events Company completed by Ernst and Young and that study derived the 19 million dollar figure and really what that looks at is how many visitors are gonna come from interstate, how many are gonna come from overseas, and what is the new money ejected [sic] into the state from having this huge influx of tourists and visitors.

The $19 million figure may well be conservative. But the public may never know, with the methodology likely to be shrouded in mystery for years to come.

Given the sketchy details, you could presume that the study was a back-of-the-envelope guesstimate on what “extra visitors” might mean for the Victorian economy, and didn’t relate specifically to a Woods visit at all. Holding hints at this in his next statement, bizarrely bringing Geoff Ogilvy into the equation:

…we calculate that if we have between 10,000 and 20,000 interstate and international visitors — and that’s realistic to expect with an event of the size of the Australian Masters with someone of the pulling power of a Tiger Woods or a Geoff Ogilvy — those sorts of crowd figures are expected.

Holding’s confusion adds to this shambolic interview conducted last week with sports minister James Merlino on 3AW. Host Neil Mitchell pushed the envelope on the source of the $19 million:

James Merlino: In terms of the benefits to the state, it is going to be a massive increase to the state…

Neil Mitchell: $19 million dollars benefit? How?

Merlino: Yeah, that’s right, that’s right

Mitchell: $19 million dollars benefit? How? Give me the figures, break it down

Merlino: It’s a common formula that we use, the economic modeling is actually conducted by PriceWaterhouseCoopers and it looks at a range of things in terms of the impact

Mitchell: Ok, lets be specific. How many people will come from interstate and overseas just because Tiger Woods is there?

Merlino: I don’t have the exact numbers for the last figure

Mitchell: Not the last figure, can you give me a ballpark figure?

Merlino: What I’m telling you Neil is that there’s an economic benefit of $19 million to the state, it looks at tourism…

Mitchell: You keep throwing this stuff out and you can’t justify it…how much overall is the government putting into this golf tournament, into the Masters?

Merlino: I can’t release those details Neil.

Merlino cites the South Australian government’s decision to pay for Lance Armstrong’s attendance at this year’s cycling Tour Downunder as evidence for the government’s prudent approach.

The central question here is whether the 10,000, to 20,000 visitors will eventuate, and if so whether they will come from interstate or overseas and then, whether they will spend money within the state or whether it will mostly end up with airlines or foreign-owned businesses peripheral to the state’s flagging economy. The calculations rely at least on three levels of abstraction that, without the report, the public will never be privy to.

The government’s reticence to release the Woods report also seems to chafe with its eagerness to publicise Tuesday’s report into the economic benefits of the Melbourne Cup, for which the Hun was again given the drop. Holding released the document, seemingly without any qualms, on Tuesday.

Of course, the most famous example of a state government failing to divulge the methodology behind the economic benefit of major events is the Albert Park Grand Prix, which will again splutter to life this weekend. This morning, the ever loyal Hun again took the bait, claiming that “up to 50,000 revheads” will descend on the course for the F1-free lead-up events today. As Crikey’s deadline approached, eyewitnesses were again describing a first day crowd of more like 5,000.

The problem seems to lie with the unwillingness of the Brumby government to follow the recognised cost-benefit analysis as recommended by both the federal infrastructure department and the Victorian Auditor General. Instead, the government has settled on a simplistic “input/output method” that has generated substantial internal dissent with the more fiscally inclined within the ministry.

The 2007 Auditor General report showed the Grand Prix is a net economic negative for the state, with the clear inference that government had mixed up economic impact with economic benefit — a bit like saying the Victorian bushfires provided a boost to state economic activity via the reconstruction effort.

Brumby went on the ABC’s 774 Melbourne this morning to discuss the Grand Prix crowd fudging with Jon Faine, before the duo moved on to a more serene discussion of race day accommodation minutiae. But the real questions over the government’s hazy approach to economic benefits remain lodged somewhere in the ether.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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