Save Albert Park Newsletter – November 2007

The 2007 annual report of the Australian GrandPrix Corporation, issued on October 31, confirmed what has been general knowledge since May; the operating loss on the 2007 Grand Prix was close to $35 million.

This represents public funds denied to basic essential services such as health, education, and public transport. The media made much of the possibility that this loss signalled the end of the Grand Prix in Albert Park. However, Save Albert Park is not celebrating yet.

The Victorian Government, led by John Brumby, has provided ample evidence that it is turning a deaf ear to the inconvenient truths relating to this event. It has rejected the findings of the recent Auditor-General’s report which found that the Grand Prix is a net economic loser for Victoria. Very revealingly, the AGPC’s 2007 annual report ignored the audit report, and repeated claims of economic benefit based on the thoroughly discredited NIEIR studies.

The Brumby Government is oblivious to the environmental damage inflicted on Albert Park Reserve and to the disruption and loss of amenity caused to park users and amateur sports clubs by the 4-5 months of Grand Prix occupation. It is listening, not to the ordinary citizens of this state, but to the business interests which apparently need this event to boost their profits and to help them with their networking.

State Government in denial on Grand Prix

audit report

The State Government’s spin doctors must have been working overtime on what to do about the Auditor-General’s economic report on the Grand Prix (May 2007). When the report was first issued, the policy was to say that the report ‘fell short’ because it did not assign a monetary figure to the promotional effect, or the ‘brand value improvement’ of the event. The audit report dealt with this criticism as follows (page 156).

‘Audit acknowledges that brand value improvement is in-principle a possible source of benefits from hosting major events. The most tangible outcome of enhanced brand value is induced tourism; the additional tourists that come to Victoria subsequent to an event as a result of their positive exposure to Melbourne. Efforts were made to source credible quantitative estimates of induced tourism for inclusion in the estimates however we are aware of no studies that can be used to measure the induced tourism effects for an event such as the Grand Prix.’

Following the issue of the 2007 annual report of the Australian Grand Prix Corporation (AGPC), which revealed that the operational loss on this year’s event was $34.6m, a new tack is being followed. The event is now being said to provide unequalled opportunities for business networking, and the existence of the audit report, with its negative findings, is being ignored.

In a direct snub to the Auditor-General’s Office, the 2007 AGPC annual report does not mention the audit report, but repeats the claims of the 2005 NIEIR economic impact report. The last sentence of the report from the AGPC chairman (Ron Walker) reads as follows:

‘It is estimated that since the event began in 1996, $1.5 billion in economic benefit has been generated for Victoria and Victorians.

The Summary of Financial Results (page 15), contains the following remarkable statement:

The operating result should be considered in conjunction with the benefits to the State of Victoria both in the form of economic benefits and the significant branding and advertising exposure generated by widespread television coverage. The economic benefit generated by the 2006 Formula 1 ING Australian Grand Prix was $174.8 million and $15.2 million in tax receipts, as noted in the 2005 NIEIR report’.

If these statement were made in the annual report of a normal business the chairman and directors would find themselves in court. They contain unsubstantiated claims and represent deliberate deception. In addition the absurd suggestion is made that the economic benefit generated by the 2006 Grand Prix was noted in the 2005 NIEIR report.

The editors of the Herald Sun and The Age have apparently fallen willingly into line with the State Government’s ‘ignore the Auditor-General’s report’ strategy (see next article). The Liberal opposition is also on board, happy to just make political capital by blaming Labor for the massive operating losses.

Abysmal leading articles

Herald Sun, Friday November 2.

Headline: ‘A formula to keep GP .... Only the most ardent Save Albert Parkprotester could seriously doubt that the Grand Prix is good for Melbourn’e

(This article has to be read in full to appreciate the quality of its analysis, the depth of the background research, and the new insights its brings to the Grand Prix issue. The author writes as though totally ignorant of the outcome of the recent Auditor-General’s economic report on the GP.)

‘The GP came along at a time when Victoria was emerging from the doldrums and its success mirrored the renewal of Melbourne as a vibrant, confident city. But we cannot ignore the rising cost of staging the race or the need to balance that against the economic benefits and the boost it gives to Melbourne’s prestige.

Premier John Brumby ignited speculation about the future of the GP saying it needs to provide value for money. It has been suggested that the race could be run more cheaply than at Albert Park, where set-up costs run into millions. Albert Park is a unique venue and the GP would lose some of its promotional benefit if Melbourne’s skyline was erased from the television coverage.

Clearly Mr Brumby has a more hard-headed view than predecessor Steve Bracks who wanted to commit to the race beyond 2010. The Herald Sun supports the GP but Mr Brumby is right when he says that a detailed cost-benefit analysis is essential before the contract is renegotiated with Formula One supremo Bernie Ecclestone. The GP gives a huge boost to our claim to be a world sporting capital and the State Government should do everything possible to keep it beyond 2010. At the right price.’

The Age, Friday, November 2.

Headline: ‘The delicate equation of weighing competing interests’

In a 750 word article on Victoria’s major events, the recent comprehensive cost-benefit audit of the Grand Prix was noted in just one sentence: The Auditor-General, Des Pearson, has queried the race’s viability.

However, Save Albert Park acknowledges that the Herald Sun published the following letter on November 5:

Auditor got it right on GP

Your editorial “A formula to keep GP (November 2) says that “only the most ardent Save Albert Park protester could seriously doubt that the Grand Prix is good for Melbourne”.

You had better add the Victorian Auditor-General to that.

In his recent report regarding the the 2005 Grand Prix – when the admitted losses were only $13.6 million – he found that the benefit to Victoria was exceeded by the costs.

And that’s an independent officer , whose job it is to tell it straight, telling the Government something it did not want to hear.

Colin Smith, St Kilda

Brumby to dump GP, says Jeff Kennett

In an article published in the Herald Sun on Friday, November 2, former Victorian premier, Jeff Kennett, was quoted as saying that ‘the State Government has decided to dump theFormula One Grand Prix’.

Jeff was also quoted on the importance of keeping the race: “It’s a very importantingredient in the brand we have created of Melbourne as the international sporting capital of the world.”.

If Melbourne lost the race because of the escalating race licence costs it would be Labor’s fault: “When we got it in1996, we paid no more than Adelaide. That was due to the good relations between Mr Ecclestone, Mr Walker and myself. If Labor has allowed that to blow out they have to accept the responsibility for it.”

He said the race should be moved to Sandown race track if necessary to keep the race in Melbourne, where a permanent track and facilities would cut costs.

These are all amazing statements, with Jeff playing politics regardless of the facts. Would anybody outside Melbourne agree that we are the international sporting capital of the world?

Regarding the Grand Prix race licence fee, Jeff would be well aware that it was subject to an annual increase. When he was in office, the annual increase was 10%, and his ‘good relations’ with Ecclestone would have made no difference. The fee increased by about 15% annually around 2005-2006 when EU countries and then Australia banned tobacco advertising. In 1996 the licence fee was about $9m, and by 2007 it had increased to $27-28m.

Jeff would also be aware that it was he who established the race in Albert Park Reserve , and thereby locked in another the other major expense component, the cost of setting up and dismantling the temporary circuit. During the Kennett years this cost was $14-16m. In 2007, it was $24m. It is remarkable for him to be now suggesting that it would be more cost efficient to move the race to a permanent circuit. It is even more remarkable considering that he of all people would know that Albert Park Reserve is the venue written into the Ecclestone race contract. No park, no race.

Jeff also endorsed Sandown as an alternative permanent venue during a 3AW radio interview with Neil Mitchell on November 1. Mitchell then commented “Well you’ve just pleased Save Albert Park no end”.

Economists find no benefits from

major events-induced tourism

A new and important paper on the economic assessment of major events, in particular the 2000 Sydney Olympics, presented at the 36th Australian Conference of Economists, in Hobart on 24-26 September 2007, lends strong support to the conclusion of the Victorian Auditor-General that there was no evidence that the Melbourne Grand Prix event induced subsequent tourism.

The paper, ‘The Sydney Olympics, seven years on: an ex-post dynamic CGE assessment’, by James A Giesecke and John Madden of the Centre of Policy Studies, Monash University, explains why economic impact assessments of major events based on input-output ((I/O) methodology (the process used by NIEIR) typically produce exaggerated estimates. Using CGE (computable general equilibrium) modelling, which was used in economic studies of the London Olymics, the Melbourne Commonwealth Games and the audit of the 2005 Melbourne Grand Prix, the authors concluded that in terms of measureable economic variables, the Sydney Olympics had a $2 billion negative effect on NSW and Australia as a whole. They found no evidence of any benefit from spending related to Games-induced tourism.

An copy of a later version of this paper is available through Save Albert Park.

The Marlboro barcode

A newspaper photo showing a barcode-like markings on the leg of the overalls worn by Casey Stoner (the MotoGP motorbike champion) excited our interest. They looked strangely familiar. To check the idea out we Googled ‘Marlboro barcode’, and up came the following:

‘What are the barcode like lines on the Scuderia Ferrari F1 Team’s car? Answer: It’s because cigarette sponsorship on cars and unforms has been banned but Marlboro is still Ferrari’s main sponsor. The ‘barcode’ was used by Marlboro sponsored teams (in place of the word ’Marlboro’) from when all tobacco advertising was banned in England and Germany ..... from 1982, but it may be older than that.’

Casey Stoner rides for the Ducati MotoGP team, and Ducati is sponsored by Marlboro. Casey is a great young bloke and if he advertises cigarettes they must be OK to smoke. Right? What brilliant marketing of a killer product!

The following statement is in circulation, and it is reprinted here as a matter of public interest. Lyn Allison has been a staunch supporter of the Save Albert Park campaign from the outset.

Keep Lyn Allison in the Senate!

Much hinges on the forthcoming federal election. We badly need a national government that can handle the great challenges of out time, including water and energy use. It is vital that we have the best possible representation in both houses of our national parliament.

We (the undersigned) value our independence. None of us is a member of any political party, but we know a good woman when we see one.

Lyn Allison is an extraordinary senator. She works tirelessly on the full gamut of major issues of concern to women – the war in Iraq, urban water management, uranium mining, climate change, mental health, assistance to asylum seekers, an independent ABC, the sexualisation of young girls in advertising, overturning of the veto on RU486, childcare and paid maternity leave, and gynaecological cancer to name only a few.

Lyn will require significant voter support to be returned as a senator from Victoria. We urge you to think of her first when you cast your vote for the Senate even if this means deviating from your usual pattern of voting. Voting above the line for the Democrats means that your primary vote goes to Lyn. If you vote below the line, make sure you mark 1 against her name.

It is crucial that we have someone like Lyn representing Australian women and men who care deeply about these issues and who are prepared to do the hard yards on the issues that really count.

Signed: Mary Crooks, Barbara Spalding, Carey Lai, Deborah Hart, Dur-e Dara OAM, Angela Munro, Carolyn Ingvarson,

Dr. Ann Morrow, Helen Halliday, Dr. Helen Kuhse

In brief

‘Grand Prix set to get Kiss of life’ This was the headline given by the Herald Sun to a short article published on October 24. What it meant was that the Grand Prix Corp. has engaged the US rock band gods, ‘Kiss’, to perform at next years Grand Prix. The Herald Sun reported: ‘The signing of Kiss is part of a bid by the GP organizers to bounce back from last year’s sluggish ticket sales. The 2008 Grand Prix will also mark the return of the V8 Supercars.’

How is it that a Formula One race, said to be the pinnacle of motorsport and a thrilling spectacle of speed, glamour and excitement, requires a rock band and the local V8 stock cars to boost ticket sales?

‘Why I look a wimp: Jeff’ On October 14 The SundayAge carried a story about Jeff Kennett complaining that John Brumby’s enthusiasm for privatisation of government assets made him look ‘a wimp, a softy’. Brumby’s enthusiasm for the Grand Prix also exceeds Jeff’s. Didn’t Jeff once say that these things (events like the GP) tend to last about ten years?

New CEO for the Victorian Major Events Company Taking over the $500,000 a year job of CEO of the VMEC from Peter Abraam is Brendan McClements, formerly of the Australian Cricket Board. Mr McClements says his job is to further develop Victoria’s major events ‘to ensure that Melbourne remains the events capital of the world’.

Sucked in The ALP is well featured in Shane Maloney’s new Murray Whelan crime thriller, ‘Sucked in’, but Save Albert Park also gets a mention. The book has the following disclaimer: ‘The author of this book, its setting and characters, are entirely fictitious. There is no such place as Melbourne. The Australian Labor Party exists only in the imagination of its members. The process by which it selects its candidates for public office is a source of ongoing bafflement.’

In the story a scene on Parliament House steps is described thus: ‘Nearby, a pair of teenage constables were keeping a bored eye on a cluster of subversive geriatrics, a thermos-fuelled vigil against the Formula One circuit in Albert Park’. Thanks, Shane.

Government secrecy Welcome indeed is Irene Moss’ national audit of free speech, released on November 5. To quote the coalition of media groups which commissioned the report: ‘The fundamentals we are dealing with go to the very rights of the democratic process, and the rights of every Australian to get information they can make judgements on.’ (The Age, Nov.6)