The escalating cost of the Australian Grand Prix has been placed squarely at the feet of the previous Victoria State administration as politicians attempt to explain away the $50m bill settled by taxpayers in 2011.

The Albert Park event has been walking a financial tightrope for several years, with doubts continuing to circulate over its future viability, and the figures released by current tourism and major events minister Louise Asher will do little to assuage either the fears of race fans or the ire of taxpayers who resent their money being spent in what they regard as a frivolous manner, especially as the 2011 race produced only $39m of economic activity in return.

With every event on the F1 calendar being subject to an annual escalator when it comes to the fees that need to be paid to the Bernie Ecclestone-led Formula One Management, the initial cost of staging the Australian GP in Melbourne has risen from $4m to $439m in just ten years. Highlighting the rocketing price, local taxpayers paid 'just' $1.7m for the 1996 event...

Asher insisted that while she felt uncomfortable with the amount of money being drawn from taxes, she said that her hands were tied when it came to renegotiating a deal with Ecclestone.

"I am not comfortable with this level of subsidy," Ms Asher, part of the current coalition administration, admitted, "The event is a good event [but] the contract is a typical Labor contract."

Asher was speaking after the release of a report on the Australian GP, commissioned by the new administration and completed by accounts giant Ernst & Young. She insisted that the report was part of the coalition's bid for transparency, and had been published despite the less-than-happy picture it painted.

"The Victorian Coalition government has delivered on its promise to commission a comprehensive study of the economic value of the grand prix for the state, and to make that report publicly available," Asher said in a statement, "The former Labor government commissioned a similar study in 2008 [but] refused to release the study publicly.

"The Coalition government is committed to delivering greater transparency of the costs and benefits of events that are supported by taxpayers' funds, [and] we have also demonstrated transparency by introducing ten documents related to the grand prix into the Legislative Council and the annual report, when complete, will be available online for the first time."

The Ernst & Young study estimated that the 2011 grand prix increased Victoria's real GSP by between $32-39m and generated between 351 and 411 full-time equivalent jobs, while a separate report, carried out by Comperio Research into the branding value of the 2009 GP, estimated that it provided a media or advertising-equivalent value of over $35.6 million to the state of Victoria.

The state's major events strategy delivers approximately $1.4 billion for Victoria each year, but Asher admitted that the Coalition government would ponder the future of the grand prix in the remaining years of its current deal, before attempting to renegotiate with Ecclestone in 2015.

"The extensive global press coverage generated by the event will help to generate future tourism and investment opportunities for the state," she pointed out, alluding to future income to be derived from the 2011 race, "The Coalition government has a strong commitment to major events, [which] contribute to the vibrancy and livability of Victoria, and help drive tourism, investment attraction, infrastructure use and community pride throughout the year. You have to look at the whole year, at the ongoing branding of Melbourne."

Asher, however, denied that Melbourne GP chairman Ron Walker should be held accountable for the deal in place with Ecclestone at present, despite him having been seen as the guilty party by some.

"He negotiates these contracts under the parameters that [the government] sets," she pointed out, "To say that Ron walks off and does his own thing is utterly incorrect. It is not accurate or fair to blame him for these losses."

The figures will no doubt also come as a stark warning for those behind the nascent USGP in Austin, where the city council recently voted in favour of the event being granted a $25m subsidy from the state of Texas' Major Events Fund, which is drawn from tax payments. Part of the argument given in favour of the support was the amount of economic activity that the arrival of F1 would bring to Austin and the wider area.....

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