The pen is truly mightier than the sword!  In my recent BLOG POST I talked about my attempts to get hold of the economic assessment of the 2012 Australian Grand Prix (GP).  The very next Monday I heard ABC Melbourne talking about it and I soon found a copy.  Surely it was the crushing pressure of the Economists at Large blog that got the report released!

I’ve now had a chance to go through the report.  The general messages are not surprising:

• The GP had a modest positive effect on Gross State Product, estimated at $32-39m (p2)
• The Victorian Government subsidises the GP by a confidential amount in the tens of millions of dollars (p50 and p53)
• This government subsidy is lost to Victoria, leading to a reduction in Victorian household consumption of $14-18m (p2)

None of this is surprising as governments of both flavours have long acknowledged that households/taxpayers have been subsidising the race for the promotional benefits we gain by holding the race.  So is it worthwhile?  This report can’t tell you:

[T]he scope of the Assessment is limited to an economic impact analysis, and as such, it is difficult to make judgements as to whether the event leaves Victoria “better (or worse) off” from a welfare perspective. … To understand whether the Grand Prix delivers net welfare improvements to Victoria, a full cost benefit analysis would need to be prepared…. A cost benefit analysis is outside the scope of the Assessment. (p55)

There is a report that attempts to quantify some of the benefit of exposure we get from the GP and it is referenced in this assessment.  It’s called the Comperio Report (p14), but it has not been released yet.  I’m trying to get a copy through the office of the minister for major events, Louise Asher.

There are, however, a few interesting things in this economic assessment.  Firstly, the assessment estimates “retained attendance” by Victorians who would have travelled outside of the state to attend a GP if it wasn’t held in Victoria.  This estimate and associated revenue are based on a survey question outlined on p60 relating to whether respondents are likely to attend a non-Victorian event.  I’m concerned about the potential for response bias relating to the phrasing and administration of this question.  I’m seeking clarification from Tourism Victoria and Ernst and Young.

Secondly, the discussion of Gross State Product (GSP) is presented in an odd way.  If you drag your minds back to Economics 101, you’ll remember that:

GSP = Consumption + Investment + Government consumption and investment + Exports – Imports

or more usually:

GSP = C + I + G + (X-M)

But on p2 and elsewhere, we’re only given GSP, C and I.  The rest seem to be lost or jammed into the former to avoid disclosing items that are considered confidential.  I’m chasing this up with Tourism Victoria and Ernst and Young.

To be continued…