Newsletter of Save Albert Park Inc.
Is it a car race? Is it a rock
concert? ...... whatever
An advertisement headed „FIRE UP MELBOURNE‟,
published in The Age on November 1, shows how the
Victorian Government intends to showcase its attitude to
saving the planet, and how, in a world in economic crisis, it
will demonstrate its ability to make effective use of precious
Our government will spend about $90 million to import the
Formula One „demolition derby‟ and a musical instrument „destruction stage show‟ from overseas and stage an
entertainment in a temporary car racing circuit in a public park.
The stated purpose is to bring economic benefits to Victoria.
The set-up and take down of the temporary circuit in Albert
Park, with 40,000 tonnes of race material trucked in and out over
a period of 3-4 months will be an outstanding example of waste
of human effort and resources, and harm to the environment
At the event, there will be fast cars, fast food and alcohol in
abundance, grid girls and grid boys, and Ferrari cars with
Marlboro barcode logos to remind us to smoke ourselves to
death, and hearing-damaging noise from „The Who‟. Tens of thousands of litres of motor fuel will be burnt.
Victorians will buy two thirds of the tickets, diverting about
$30 million which otherwise would have been spent elsewhere
within the state economy. All of this and more will be sent
overseas to pay the race licence fee set by the Formula One
„ringmaster‟, Bernie Ecclestone, plus a million or so to pay the
UK rock band, „The Who‟.
All up, the Victorian government will lose $45 million on
staging the event, and this shortfall will be taken from public
Some interstate and overseas visitors will fly here to attend the
event, and will spend money in hotels, restaurants, and the
casino. This increased turnover will be the much vaunted
„economic impact‟, the net profit from which will go mainly to the
airlines, hotels, and hospitality businesses. This profit will
represent „corporate welfare‟, a handout to private business from
the Victorian public.
Then there will be the profit earned by the construction and
trucking firms and the hirers which participate in the $25 million
government contract to build and dismantle the temporary circuit.
So what is this really? Is it a project intended to benefit
all Victorians? Or is it actually a racket, a fraud perpetrated
on the Victorian public by an unprincipled government for
the purpose of currying electoral favour with big business?
That‟s what it really looks like.
2008 GP loss no surprise
The 2008 annual report of the Australian Grand Prix
Corporation (AGPC), issued on October 30 (along with over
200 reports from other state government agencies), revealed
that the 2008 F1 Grand Prix event incurred an operating loss
of $40.136 million. This was no surprise: The graph on page
1 of SAP‟s May 2007 newsletter predicted this result.
Predicted losses for 2009 and 2010 are $45 and $50,which
will bring the total operating losses since 1996 to $255. From
2010, the graph shows steep further increases, mainly caused by
an expected 15% annual increase in the race licence fee.
There are indications that Formula One might moderate its
demands, because a number of host circuits can no longer afford
the fee. If this happens the curve will flatten out somewhat,
reflecting the 10% annual increase which was the norm up to
about 2006. However, because Formula One‟s main owner, CVC
Capital Partners, is heavily in debt, and the race teams are
demanding more of the revenue, the current loss trend shown on
the graph may continue.
Gems from the Grand Prix
Corp.’s annual report
The AGPC annual report attributed the $40 million operating
loss to increases in the event staging fee, (ie Formula One‟s
race licence fee), the participation of the V8 Supercars, increases
in circuit construction costs, and the provision of other
entertainment (mainly the American „Kiss‟ rock band concert).
The AGPC now expects „the deficit between costs and
revenue to increase by 10% a year‟. This means the loss on
the 2009 race will be over $44 million, close to SAP‟s 2007
estimate of $45 million.
Increased ticket sales revenue of 5.8% was attributed largely to
„the Kiss concert, the Sidetracked music festival and the offer of
free admission to children 12 and under‟. There was no mention
of the effect of the V8 Supercars, stated to have provided
„thrilling support for Formula One with three days of racing‟.
So costs increased because of the Supercars and the
music concerts, but it was the music concerts (and giving
little kids free admission) which increased ticket sales. Has
the AGPC considered whether the Supercars provide value
for money? It seems the „nag‟ factor exerted by little kids
might far outweigh the pull of the V8s.
The chairman, Ron Walker said that the event continues to
provide „enormous benefits to Melbourne and Victoria‟, and Greg
Hywood from Tourism Victoria was quoted as repeating the old
bit of hype that the event had „massive‟ worldwide television
audiences. However, it might be significant that the 2008 report
contained no reference to the NIEIR economic impact studies,
and its hugely inflated claims. Also, attendances were stated to
be „estimated‟, not in terms of established fact.
It‟s clear that money (the public‟s money) is not a
problem at the AGPC. The annual report showed that the
$40 million operating loss included the awarding of about
$165,000 in bonuses to its top executives, and that figure
included a $50,000 bonus for the CEO, Andrew Ward,
bringing his annual salary to about $355,000, equal to or
better than that of the Prime Minister
The Auditor-General replies but
doesn’t answer the question
The previous issue of this newsletter advised readers that SAP
had written to the Victorian Auditor General seeking clarification
as to what was meant by the statement his May 2007 report,
„State Investment in Major Events, that major events have
undoubtedly delivered „economic value’ to Victoria.
SAP received a reply on October 13 which still did not clarify
what „economic value‟ was supposed to mean. The final
paragraph of the letter read as follows: „A positive economic
effect however does not automatically represent a net economic
benefit to the Victorian economy. An audit evaluation in the form
of a cost-benefit analysis suggested a negative overall net
benefit for Victorians from the 2005 Formula 1 Australian Grand
Prix of $6.7 million, using the most reliable data and best
estimates for benefits and costs. The first sentence apparently means that economic impact does not necessarily translate to
net economic benefit. The second sentence re-states the finding
of the cost-benefit analysis, but uses different words.
The audit report itself stated in its ‘In brief’ summary:
„... according to the study’s best estimate costs exceeded
benefits by $6.7 million.’ But it did not follow up this conclusion
page 37 of the report: by the all-important statement, buried on
„.... if costs exceed benefits there is a negative net social
benefit and the project should be modified or not supported’.
Instead, the Auditor-General‟s report led off its „Findings‟ section with the sentence: ‘Major events have undoubtedly
delivered economic value to Victoria’, and made no reference
to the findings of the cost-benefit analysis.
This is an important issue because the State Government
was able to seize on this statement and use it to justify the
extension of the Grand Prix contract, despite huge operating
losses on the event. SAP has made a submission to the current
inquiry by the Public Accounts and Estimates Committee into the
findings of the Victorian Auditor-General‟s 2007 reports, pointing
out apparent serious deficiencies in the Grand Prix audit report.
Skate park VCAT re-hearing adjourned
On November 10, VCAT agreed to adjourn to February 9 its re-
hearing of objections to the building of a skate park in Albert Park
Reserve. This means that the hearing will be delayed until after
the election of a new City of Port Phillip council.
The history behind this decision is lengthy and emotionally
charged. The City of Port Phillip (COPP) decided on April 24
2007 to grant a permit for a skate park at the corner of Fitzroy
Street and Lakeside Drive. This decision was driven by a desire
to provide what was seen as a needed recreational facility for
young people, and was preceded by a search for suitable sites
and considerable public consultation.
The proposal was opposed by „Save Our Park‟ (SOP), a group
which comprised the council of the St Kilda Park Primary School,
residents, and some commercial interests. Save Albert Park and
the Park Community Association and others had also lodged
objections. SOP took the matter to VCAT for review, where the
COPP proposal was approved. SOP then sought an appeal to
the VCAT decision through the Supreme Court, and won, and on
May 5, 2008, the court sent the matter back to VCAT for a re-
hearing. Save Albert Park and others joined SOP in providing
new evidence for the re-hearing. SAP‟s evidence was that a site on the foreshore near the St Kilda marina was environmentally
and economically superior to the park site.
Campaign to save Sydney’s
Olympic Park from V8 street
racing gathers strength
The‟ Save Olympic Park – No V8 Racing‟ campaign in Sydney has grown rapidly since the agreement by the
NSW Premier to fund a V8 Supercar event on a park
circuit from 2009, with up to $86 million over four years
(see September and October Newsletters).
The campaign has publicised the potential impact on the
park – trucking and construction, loss of trees, relocation of
services – and the threat it poses to the area‟s masterplan
as “a showcase of urban renewal and environmental
sustainability”. Opposition quickly formed through a broad
coalition of residents and environmentalists, and motor
sports groups who favour a return to the permanent track at
At a protest rally at the park on October 19, the key speaker,
Federal Labor MP Laurie Ferguson, called the government‟s
decision “a sell-out of the people of this state”. Greens NSW
Senator Lee Rhiannon declared it a continuation of “the bad
old policies of deals done behind closed doors with no
public consultation”. Local councillor Malikeh Michels, who
had been interviewed on SAP‟s 3CR program on 13 October,
saw the race as one for “the big end of town”. A Total
Environment Centre speaker dubbed the decision “an act of
Save Albert Park‟s guest speaker, Keith Wiltshire,
drew parallels with the many gaps between promise and
reality which the Grand Prix in Albert Park has shown from
its inception: “no net loss of open space”; “no permanent
race facilities”; “no long-term damage”; “just four days a year”; “no drain on the public purse”; “1000s of jobs
created”; “no negative impact on residents” – and no
credibility. With the suspension of relevant legislation and
attempted suppression of opposition, our campaign was
also presented as one for civil rights and the democratic
process as well as for public parkland. Though we wished
them quicker success, SAP‟s long campaign was reported
as “inspiring” for SOP supporters.
Tom Bohan, an SOP-No V8 spokesperson, reminded the NSW Premier that people want government accountability,
better public transport services and properly funded
schools and hospitals, “not this financially risky and
environmentally destructive car race”. Voters‟ decisions on
October 18 seemed to support this view. The biggest swings
ever recorded in State or Federal by-elections included the
defeat, in the seat of Ryde, of the ALP candidate – an
“environmental manager” who had in fact dissented from
the Premier‟s V8 decision. As well as Olympic Park‟s open
space and stadiums, Ryde contains the green Olympic
Village reborn as an even greener residential suburb, and
The SOP-No V8 campaign is now focused on the defeat of the
enabling legislation in the NSW upper house, the Senate. Four
cross-benchers have been especially targeted, with one, Rev
Dr Moyes, already persuaded to vote against the bill.
The Opposition has said it opposes the race, but leader
Barry O‟Farrell and Labor members with known
environmental sympathies have also been heavily lobbied,
with a coming mini-budget as the next hurdle. Bicycle NSW
and the Australian Council of Motor Clubs have urged
members to campaign actively against the plan.
The government has already been embarrassed by a “clerical
error” in its recent anti-tobacco advertising legislation, with a clause which would have allowed tobacco companies to sponsor
motor racing. This sparked speculation (SMH, Oct. 24) that there
is a strategy to win Formula One from Melbourne using a “low-
impact” V8 event at Olympic Park as a persuasive precedent for
a Grand Prix street circuit.
A more serious question of probity was raised by the
ABC‟s Stateline NSW program on October 31. The government‟s new lobbyist code of conduct was tested by questions about the
relationship between the Minister handling the V8 deal, Ian
Macdonald, and two businessmen associated with V8 Supercars,
including David Coe of Allco Finance Group.
The two businesses have been donors to the ALP, but the
Minister claimed that neither “put any special pressure” on
him. His decision, he insisted, was based on his discussions
with companies with Olympic Park interests, such as hotels.
He also claimed that V8 organisers won‟t return to Eastern
Creek “due to the difficulties of getting crowds there. . . “
The financial implications may yet be a factor. The Allco
Finance Group went into receivership on November 4, with
debts of $1 billion, though any direct Supercar liability
seems unlikely. The organisers of Adelaide‟s 2008 Clipsal
500 have claimed a profit of $850,000, but only on the back
of $2.5 million in State Government grants.
With major events seen as an electoral lifebelt, the NSW
Premier has refused to release three feasibility studies, the
V8 contract and related documents which would shed light
on the actual triple-bottom-line for taxpayers. The NSW FOI
legislation is likely to be unhelpful to opponents.
Tony Cochrane of V8 Supercars Australia says the event has
“engraved very much in the Australian psycho (sic) of all the good things Australia represents: mateship and great sporting rivalry” –
which surely outspins even Ron Walker and John Brumby.
Meanwhile, the „Save Olympic Park – No V8 Racing‟
campaign is shaping as much more determined than
the race proponents had expected. SAP has pledged its
Interesting times in Montreal
There is a serious problem with the Canadian Grand Prix
in Montreal. F1 „ringmaster‟ Bernie Ecclestone has taken
the race out of 2009 calendar, because, it appears, the
circuit hasn‟t paid the licence fee for the 2008 race. There
is a disagreement about the amount to be paid, but also
there is no financial backer for future races.
The Montreal circuit has a contract with Formula One
which has several more years to run. The existence of the
contract apparently doesn‟t worry Ecclestone. No race fee
paid up, no race. However, there is no talk at all about a
cancellation fee supposed to be paid by a circuit if it can‟t
meet its contract obligations. It seems that if it wants to, the
Montreal Grand prix promoters can settle their 2008
account and just walk away from the contract.
The Montreal promoters want to get the race back, but
they need a generous new backer. The race fee has been
quoted as $US30m (now about $A44m) a year, but the race sales revenue is only $US15m.
Readers of this newsletter will recall that when the Canadian Government banned all tobacco advertising a few years back, the Montreal circuit had to find about $A18m a year to replace the lost sponsorship. This was provided by a brewery and the Quebec province government. It seems these sources have dried up. Perhaps the local government and the brewery realised they weren‟t getting value for money.
All this has interesting connotations for the Melbourne race. What sort of contract has the Victorian Government signed up to? Is there a force majeure or an exit clause, or has Brumby locked us into horrendous losses on the race for seven more years to come?