In the light of City of Newcastle's $32 million deficit and the growing infrastructure backlog (NH 23/10), it's essential we look carefully at the dollars and cents behind council's latest claims about the benefits of the Newcastle 500 (NH 25/10).
Residents and businesses badly impacted by this event have repeatedly called for a cost/benefit analysis. The latest EY Economic Impact Report does not provide this. Rather, the report fails to give either costs or believable benefits.
EY begin their report with a warning, reading in part: "We do not imply and it should not be construed that we have verified any of the information provided to us . . . Our conclusions are based, in part, on the assumptions stated in the information provided by the client (CN) . . ."
Freedom of Information requests (GIPAs) received by NERG can attest to the lack of veracity in these assumptions - since the apparent benefits are directly derived from attendance figures provided by Supercars.
Almost half of these tickets are free and Supercars counts them in their figures whether people come or not.
In 2018, the Herald (16/11/2018) drew attention to the problems of relying on Supercars figures. A huge discrepancy was found between Supercars 2017 attendance figures and the phone data collected by Hunter Research Foundation Centre in their evaluation. According to the Herald article, figures provided by Supercars could not possibly have been accurate since:
"Supercars' crowd figure of 192,242 for last year's Newcastle 500 is at odds with mobile phone data which shows an almost identical number of people were in a much larger geographical area over the race weekend."
NERG calculated that there could not have been more than 80,000 attending the event over the three days.
CN and Supercars continue to provide the public with Supercars "official" figures. When compared with the 2017 event these could not possibly be true. Yet these are the very figures EY relies on in their report.
Although the "official" attendance numbers dropped over the next two events, figures given by Supercars show an increase in interstate and international visitors. Can we believe these figures?
Supercars does not provide an actual count of attendees. Rather they use the number of "tickets issued"- sold or given away for free. Supercars counts them in their figures whether people come or not.
An attendance GIPA received by NERG shows that Supercars claimed the numbers of interstate tickets distributed in 2018 increased from 9382 in 2017 to 12,627 in 2018. They were largely issued free to members of interstate teams and staff whose numbers jumped unbelievably from 624 in 2017 to 2017 in 2018.
By lowering local businesses and local contractor numbers and increasing interstate visitor numbers Supercars can more readily meet the interstate visitor target. According to Supercars calculations, local numbers dropped from 890 in 2017, to 196 in 2018. Manipulating the figures is designed to give the illusion that the event is appealing to interstate visitors. Surely we can assume Supercars worked the same magic in 2019, when numbers were clearly much lower than even 2018.
The other report released by CN concerns residents and businesses perceptions of the benefits. Support for the event wanes significantly the closer respondents are to the circuit. Yet those who experience the disruption, social dislocation and economic cost of this event come to be regarded by those further away as the selfish ones - for failing to consider unproven benefits to the city as a whole.
Costs were not included in the EY report, but CN did mention the sum of $1.6 million in the Herald (25/10). But this event has never been fully costed. CN changed their budget reporting system after 2016. Services such as road re-surfacing and rehabilitation and park maintenance became absorbed into generalised categories. The costs for any individual project can no longer be ascertained, even by the councillors.
We can get some idea of what these costs might be from a statement made on the ABC by the SA Premier when he axed the Adelaide 500. He quotes the cost of each event as "north of $10 million". The Adelaide 500 was a bigger event, over four days. Nevertheless, NERG's estimation of costs from freedom of information requests believes it costs our ratepayers more than $5 million a year.
So should this new report provide the basis for council to support another five years of this event? Given the budget blowout and increasing infrastructure backlog, as well as the negative impacts on residents and businesses inside and close to the circuit, the event should at least be fully costed. EY have expressed caution, concluding in their preface:
"We highlight that our analysis and report do not constitute investment advice or a recommendation to you on a future course".
