In Bendigo's showgrounds precinct, sporting clubs and council planners spent 2022 and 2023 mapping out what a new regional stadium, and an athletes' village designed to convert into social housing, would mean for a city that rarely gets first call on major state investment. None of it was fantasy. In April 2022 Victoria signed a binding contract to host the 2026 Commonwealth Games across four regional hubs — Geelong, Ballarat, Bendigo and the Latrobe Valley — a model billed by the government as the first Commonwealth Games ever spread across regional cities rather than staged in a single metropolis. Eighteen months later, all of it stopped. On 18 July 2023 the Victorian government announced it was walking away from the Games it had won, citing a cost blow-out from an original estimate of around $2.6 billion (approx.) to more than $6 billion. What regional Victoria was left with was not a Games, but a substitute package of promises — and a bill that took a state auditor's report, and then a parliamentary inquiry, to fully tally.
What the government did
Victoria's bid won because it was different: rather than compete for a single capital-city Games, the state proposed hosting most sports across regional hubs, pitched as a way to spread a major event's benefit beyond Melbourne. The Commonwealth Games Federation granted Victoria an exclusive negotiation period in December 2021, the state signed heads of agreement in February 2022, and the binding host contract followed in April 2022 — committing Victoria to deliver the Games in roughly four years, well short of the seven-to-eight years hosts are typically given (Victorian Auditor-General's Office, Withdrawal from 2026 Commonwealth Games, 20 March 2024). Cabinet approved a budget of $2.7 billion gross, with an estimated net cost of $1.6 billion after revenue and Commonwealth contributions, that same month (VAGO, March 2024). Jacinta Allan, then Deputy Premier, was sworn in as Victoria's first Minister for Commonwealth Games Delivery in June 2022 and held responsibility for the project throughout, before becoming Premier in September 2023.
Costs rose through 2022 and 2023 as venue plans, the sport program and an additional regional hub were added. Internal estimates put to government in the weeks before the decision ranged between $4.2 billion and $4.86 billion gross (approx.) — high enough that Cabinet declined a further funding proposal in mid-July 2023 (VAGO, March 2024). The withdrawal followed within days. On 18 July 2023, Premier Daniel Andrews and Ms Allan announced Victoria would not proceed, with Mr Andrews telling reporters: "I will not take money out of hospitals and schools to fund an event that is three times the cost of what was estimated and budgeted for last year" (Premier of Victoria, media statement, 18 July 2023). A settlement with the Commonwealth Games Federation, Commonwealth Games Federation Partnerships and Commonwealth Games Australia followed on 19 August 2023: Victoria agreed to pay $380 million, and around the same time cited a gross cost estimate of $6.9 billion as the liability it was avoiding (Joint Statement on Victoria 2026 Commonwealth Games, 19 August 2023; VAGO, March 2024).
The strongest case
A government that says no to a tripling budget, before the concrete is poured, is doing its job
Put the decision at its strongest, and it is a straightforward fiscal-discipline argument. Victoria entered the decision already carrying the largest net debt of any Australian state government, on a trajectory its own Budget forecasts have it growing for years regardless of the Games (Department of Treasury and Finance, Victorian Budget 2025-26 and 2025-26 Budget Update). A three-week regional sporting event whose gross cost estimate had run from $2.7 billion to somewhere near $6-7 billion in around sixteen months — more than double, on the government's own account — was competing directly against hospital beds, school maintenance and the housing crisis for the same borrowed dollar. Most Commonwealth and Olympic hosts of the past two decades have finished over their original budget; walking away before venues were under construction arguably closed off a larger loss than the one Victoria ultimately paid. A $380 million settlement, unwelcome as it was, is a fraction of the $6-7 billion the government said it was on the hook for had it proceeded. On this reading, the government did something governments rarely do: treat a bid as reversible and redirect the freed-up money to a stated $2 billion regional package rather than keep funding an event whose costs were still climbing.
The evidence
The primary record does not support the government's own numbers at either end of the story. The Victorian Auditor-General's Office examined the full life of the bid — the original costing, the 2022-23 blow-out and the withdrawal itself — in Withdrawal from 2026 Commonwealth Games, tabled 20 March 2024. It found the $6.9 billion figure the government released publicly in August 2023 to justify the settlement was itself overstated and not transparent: the estimate double-counted risk, combining a $1 billion contingency allowance with a further $2 billion in "additional cost pressures" that substantially overlapped it. A transparent calculation, VAGO found, would have produced a figure closer to $5.9 billion (approx.) (VAGO, March 2024). Even the number Victoria used to explain why it had to exit a contract it had signed was not one the state's own auditor could verify.
VAGO's second finding concerns the front end of the project, not just the exit. The original 2022 business case, prepared to the compressed timeframe the four-year build window imposed, underestimated costs and overstated benefits, and the Department of Treasury and Finance and Department of Premier and Cabinet continued recommending the project proceed through 2022 and into 2023 even as both flagged rising risk — without formally advising government that hosting might be unfeasible until June-July 2023, weeks before the public announcement (VAGO, March 2024). An 18-month parliamentary inquiry, the Legislative Council's Select Committee on the 2026 Commonwealth Games Bid, reached a similar conclusion in its Final Report, tabled 1 April 2025 with 62 findings and six recommendations: the business case was "deeply flawed," and the officials preparing it could not get the information they needed because of constraints government itself placed on their access, yet ministers relied on it regardless (Parliament of Victoria, Select Committee on the 2026 Commonwealth Games Bid, Final Report, 1 April 2025).
VAGO's total figure of $589 million (approx.) covers the settlement itself plus the money already committed to planning, delivery-agency operations and the wound-up 2026 Organising Committee before the government pulled out — spent preparing for an event that never happened, on top of the price of leaving it (VAGO, March 2024).
The critique: a bid that failed its own numbers
Two findings from the primary record sit uncomfortably next to each other. The business case that won Cabinet approval in March 2022 produced a net cost estimate — $1.6 billion — that had roughly tripled within sixteen months, before a single permanent venue was built. That is not a minor forecasting miss; it is a costing that failed to survive contact with its own project. And when the government came to explain why it was walking away, the number it gave the public was not a clean, independently verified figure either: $6.9 billion was inflated by exactly the kind of double-counted risk provisioning a competent Treasury gateway review exists to catch.
Victoria's own state auditor could not verify the number the government used to justify tearing up the contract it had signed.
The Select Committee added the institutional dimension: officials preparing the business case could not get the information they needed, yet ministers relied on it anyway to commit the state to a binding contract (Parliament of Victoria, Final Report, 1 April 2025). This was not a mess inherited from a previous government. Jacinta Allan held the Commonwealth Games Delivery portfolio from its creation in June 2022 through the withdrawal in July 2023, before becoming Premier that September — she was the responsible minister while the business case was prepared, while costs escalated, and when the decision to cancel was taken. VAGO's own recommendation that Victoria review how its public service advises government on major-project risk was not accepted; only a narrower recommendation, to close gaps in existing guidance documents, was accepted in part (VAGO, March 2024).
The regional promise, recut
The government's justification for cancelling rested partly on redirecting the money to regional Victoria directly, rather than spending it on three weeks of sport. On 18 July 2023 it announced a $2 billion package, including a $1 billion Regional Housing Fund promising more than 1,300 homes across the regions that would have hosted the Games, plus 17 sporting-infrastructure upgrades at venues originally slated for Games use (Premier of Victoria, 18 July 2023).
That promise has narrowed since. By October 2024 the government confirmed that not all 1,300 dwellings would be new-build permanent housing; the count also folds in upgrades to existing social housing stock and transitional accommodation, prompting the opposition to accuse it of shifting an existing maintenance program under a new fund and presenting it as additional houses (reported comments, October 2024). Independent reporting on the fund's progress has it spending only a modest share of the $1 billion allocation by mid-2025, with completion now forecast for June 2028 (approx.) — well beyond the original 2026 Games date the housing was meant to follow. On the sporting-infrastructure side, only a handful of the 17 promised regional upgrades were complete as of the most recent public reporting, with some individual projects, including social housing at Colac, pushed out to 2027-28 (approx.; independent reporting, 2025). Regional communities that lost a Games were promised a faster, more certain substitute; on the government's own timelines, that substitute is running years behind schedule.
The reputational bill
Victoria's exit did not just cost money inside the state; it left the Commonwealth Games Federation searching for a replacement host with less than three years' notice, after other candidates reportedly declined the opportunity. Glasgow agreed in September 2024 to stage a scaled-down 2026 Games: around 10 sports rather than the 22 Victoria had planned, existing venues rather than new regional infrastructure, and hotels and university residences rather than a purpose-built athletes' village (Commonwealth Games Federation and Glasgow 2026 organisers, public statements, 2024, approx.). Around $200 million of Victoria's $380 million settlement is understood to be funding that Glasgow event directly (reported financing arrangements, August 2024, approx.). When the Games open in Glasgow in late July 2026, they do so substantially on Victorian taxpayers' money, staging a fraction of what Victoria itself once promised.
That is the clearest illustration of a reputational cost the Auditor-General's report and the parliamentary inquiry both describe in different language: a state government put its name to a binding international hosting contract, then broke it. Whatever the merits of the fiscal case for withdrawing, the manner and lateness of the exit — after a signed contract, a sworn-in delivery minister and eighteen months of public commitment — is now a data point every future Games federation or major-event partner will weigh before trusting Victoria's signature again.
The cost of a Games never held
Strip away the politics and the balance sheet is stark: Victoria has no Games, no purpose-built regional venues, no athletes' village — and a $589 million bill (approx.) for the privilege, per VAGO's March 2024 accounting. Of that total, $380 million was the settlement paid to the Commonwealth Games Federation, Commonwealth Games Australia and Commonwealth Games Federation Partnerships on 19 August 2023; the remaining roughly $209 million (approx.) was money already spent before the withdrawal — on the 2026 Organising Committee's operations, venue design and other planning work that produced nothing transferable once the event was cancelled (VAGO, Withdrawal from 2026 Commonwealth Games, 20 March 2024).
The sharpest illustration of what that money now buys sits outside Victoria altogether. Of the $380 million settlement, roughly $194 million (approx.) is funding Glasgow's scaled-down staging of the Games in July-August 2026 — a contribution that covers close to two-thirds of Glasgow's own delivery budget, reported at around £150 million (A$290 million, approx.), with no UK or Scottish taxpayer funding the event itself (Hunter Fujak and Joshua McLeod, "Victoria paid for Glasgow's Commonwealth Games," The Conversation, 24 July 2026, approx., citing Commonwealth Games Federation figures). Victorian taxpayers are, in effect, underwriting most of the Games their own state government signed a contract to host.
- $589m (approx.) — total public money VAGO found spent or committed with no Games delivered (VAGO, March 2024)
- $380m — settlement paid to Commonwealth Games parties, 19 August 2023
- ~$209m (approx.) — other sunk costs: organising committee, venue design, planning work (589m minus 380m; VAGO, March 2024)
- ~$194m (approx.) — of the settlement now reported funding Glasgow's replacement Games directly (The Conversation, 24 July 2026, approx.)
- "more than $3 billion" — economic contribution the government itself promised the Games would deliver, plus roughly 7,500 jobs across build, Games-time and legacy phases (Premier of Victoria, 12 April 2022) — a benefit case that, like the cost estimate, was never independently audited
That last figure matters because it cuts against a simple retelling of this as only a cost story. When Victoria signed the host contract in April 2022, the government's own justification went beyond prestige: it promised "more than $3 billion" added to the state economy and close to 7,500 jobs across the pre-Games, Games-time and legacy periods (Premier of Victoria, "Regional Victoria Hosting 2026 Commonwealth Games," media release, 12 April 2022). None of that benefit has been realised, any more than the venues or the Games themselves were. In fairness to the government, this $3 billion figure was its own promotional projection and was never put through the kind of independent scrutiny VAGO later applied to the exit cost — so the same scepticism that is warranted toward the inflated $6.9 billion withdrawal figure should also apply to the benefit case that justified signing on in the first place. A business case built on the same compressed timeframe and thin information VAGO and the Select Committee both criticised was, on the balance of the evidence, at least as likely to have overstated the upside as it was to understate the cost.
Markets did not treat the withdrawal as a debt-management failure: Standard & Poor's affirmed Victoria's AA credit rating within days of the 18 July 2023 announcement, consistent with a reading that cancelling a runaway-cost project was the fiscally disciplined choice (S&P Global Ratings, cited in The Mandarin, "Victoria credit rating affirmed; state cancels Commonwealth Games," 18 July 2023). That is a fair point in the government's favour, and it is worth holding alongside the criticism rather than against it. But a credit rating prices the state's capacity to service its debt, not the quality of the decision-making that produced the debt in the first place. VAGO's findings were never about whether Victoria could afford to pay $380 million — it plainly could. They were about why a state that could afford it ended up needing to: a business case that was wrong on the way in, and a headline number that was wrong on the way out, produced by the same institutions in the same eighteen months.
The risk to the future
A costing failure the state has not yet fixed, on projects far bigger than a Games
The Commonwealth Games cost Victoria hundreds of millions of dollars and a diminished international reputation, but the underlying failure VAGO identified — a business case approved on compressed and constrained information, departments that kept recommending "proceed" while privately flagging unfeasibility, and a headline public number the state's own auditor could not verify — is a governance problem, not a sporting one. VAGO's recommendation for a broader review of how Victoria's public service advises government on major-project risk was not accepted; only a narrower recommendation, to tidy existing guidance documents, was accepted in part.
That matters because Victoria is not short of bigger bets riding on the same institutions getting the numbers right the first time. The Suburban Rail Loop, the North East Link and the state's wider Big Build pipeline carry price tags many multiples of the Commonwealth Games' at every stage of their own estimates, and rely on the same Treasury gateway and departmental advice processes the Auditor-General found wanting here. A state already carrying the nation's largest net debt — forecast at $167.6 billion in 2025-26 and rising toward $194 billion by 2028-29 under its own Budget figures — has the least room of any Australian jurisdiction to keep discovering, years into a project, that the original number was wrong (Department of Treasury and Finance, Victorian Budget 2025-26 and 2025-26 Budget Update). Regional Victoria, meanwhile, is left holding a legacy package running behind the schedule promised in its place. The risk is not that Victoria will host another Commonwealth Games; it is that the same costing habits surface again on a project too large to walk away from for $380 million.