F1 race results in huge losses for Melbourne One of the nation's most respected economists has accused the Victorian Auditor-General of being ideologically driven and incompetent after a damning report found the Bracks Government had overestimated the economic benefits of the Formula One Grand Prix by more than $100 million.
A report by Auditor-General Des Pearson yesterday challenged figures provided to the Victorian Government that estimated the economic benefits of the event, including tourism, at $175 million.
Criticising a lack of transparency in the figures, Mr. Pearson found gross state product generated by the event was a far more conservative $62.4 million.
A separate cost-benefit analysis by the Auditor-General said the grand prix was staged at a net $6.7 million loss, with costs running to $69.8million.
But the economist who led a team that provided the original cost-benefit assessment of the event to the Bracks Government launched an extraordinary attack on the Auditor-General.
National Institute of Economic and Industry Research executive director Peter Brain said Mr. Pearson had exceeded both his mandate and competence. In a published response to the report, Dr Brain said the Auditor-General's department had made "gross errors" in its economic analysis that led to "absurd conclusions".
"It is fairly clear the approach you have taken to this audit is driven by subjective issues of ideology and preference rather than objective considerations," the economist said.
Dr Brain attacked Mr. Pearson's "dismal efforts" in checking facts.
"When ideology and prejudice are motives, the facts do not matter," Dr Brain wrote in a letter to Mr. Pearson dated May 1 and published in the report tabled in parliament yesterday.
"Many of your conclusions are not well thought out and are based on no, or flimsy, evidence," he said The Australian
[Editor's Note: This is just another example of F1 being too expensive and every race promoter taking a financial meeting. At some point in time the local governments will put their foot down and run F1 out of town, much like we see in the USA whereby the local governments have wised up and run NASCAR out of NY City, Seattle and Denver. Champ Car can put on a race in Melbourne for much less cost than F1, the promoter would actually make a profit and the city, like Surfers Paradise, would be much better off financially.]