Plans for Gold Coast 2018 Athletes' Village in doubt after stark warning from auditers
Tuesday, 19 June 2012
June 19 – Plans to construct a AU$663 million (£428 million/$671 million/€534 million) Athletes' Village for the Gold Coast 2018 Commonwealth Games at Parklands have been thrown into doubt following an audit of Queensland's finances led by former Federal Treasurer Peter Costello.
It was announced last month by Commonwealth Games Minister Jann Stuckey that Parklands (pictured below) would house the Village after the new Queensland Government confirmed the venue as set out in the Bid Book.
Post-Games, it has been proposed to claw back the building costs by selling off the Village's 1,358 apartments for public use.
But the audit report has warned that the existing plan creates huge financial risks and they have suggested creating "temporary accommodation" as a more cost-effective plan.
"There are currently no contracts in place for the development of the Games village, so there is considerable uncertainty as to who will bear the development risk," said the report.
"It is also difficult to predict the likely state of the Gold Coast property market at the time that sales of apartments may occur.
"However, projected sales revenue of AU$663 million (£428 million/$671 million/€534 million) may be optimistic, especially if there is limited demand and a significant boost to supply into the market through the release of 1,358 units into the Gold Coast market over a relatively short period of time.
"Given the risks and uncertainties involved, any reduced revenue or increased holding costs would give rise to an increased funding cost for the Government.
"Under the current proposed model, it would appear that the State may be required to commit to underwrite developers or to directly fund the provision of the Games village.
"The former would require compensation to a developer who would factor in their holding and interest costs while the latter would require additional debt with interest and holding costs for the State."
It continued: "These issues are currently being addressed in the review being undertaken by the Department of State Development, Infrastructure and Planning, and Treasury, which will also examine the suitability of the site and the possible use of temporary accommodation rather than a fully permanent village.
"It is highly desirable that further consideration is given to options which mitigate the current high risk that costs will exceed current projections."
The report also suggested that the Games may not generate as much money as anticipated.
"The Commission understands that a substantial amount of due diligence work has been undertaken to date in developing cost estimates for the 2018 Gold Coast Commonwealth Games," it said.
"Nonetheless, based on previous history with events of this size, it is highly likely that these estimates will represent a cost floor rather than a likely outcome.
"While events of this nature bring considerable benefits, the decision to hold such events should be informed by clear assessment of economic benefit and affordability.
"For example, the post-economic impact analysis of the Sydney Olympics conducted by Monash University, which took these issues into account, suggested that the Olympics generated a net economic loss of approximately AU$2 billion (£1.3 billion/$2.02 billion/€1.6 billion)."
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