What is it with governments and car races?

Just about every Australian city has had a disastrous experience with a publicly-subsidised motor race. In most cases, the governments concerned have been advocates of market liberalism, who somehow find it possible to make an exception for motorsport.

Adelaide spent a fortune to buy the Grand Prix, only to see Jeff Kennett spend even more to entice it to Melbourne (at the same time as he was closing schools and sacking hospital staff). Economically unsound from the outset, the Grand Prix has experienced steadily declining attendance and interest, and is unlikely to last beyond 2015.

Kate Carnell in Canberra wasted a fortune on the V8 Supercars before admitting defeat. Before that, there was the Greiner government’s Eastern Creek fiasco. Now, we have another fiasco on the Gold Coast.

I’ll pass over the easy pointscoring about a government, claiming to be reduced to such straits that it has to sell off the family silver, blowing over $10 million on a sporting event. Even supposing we had to spend this money on sport, surely we could do better than this low-grade exercise. I have a few suggestions over the fold, and would welcome more.

First up, we could make a comparison to the Masters Games in Sydney which got heaps of global publicity (a quick look at Google News confirms this, and suggests that the Gold Coast event was internationally invisible), and attracted large numbers of international participants, for a comparable expenditure ($8.5 million each from NSW and the Cwlth). There are many such events we could go after, or else establish our own.

And if this kind of money is available to splash around, why not do something really spectacular, like buying the Grand Finals in one of the major football codes?

Any more suggestions?

57 thoughts on “What is it with governments and car races?

  1. I suggest governmets stay a long way away from funding anything to do with elite sport. I also suggest that sponsorship for elite sport be made non-deductible and that media organisations carrying coverage of elite sport be deemed to be carrying advertising at the market rate for tax purposes.

    I’d also like the next politician who says having an elite sport or some corporate fandango “will be good for tourism” be taken directly to the public pillory, which I will personally erect, get dacked, and left there for public amusement and abuse for at least 24 hours — and that publication of that be tax deductible.

    If there’s one thing we don’t need it’s public policy support for tourism.

  2. Whilst we are at it the Australian Institute of Sport ought to get no public funding. If we are forced to fund sport with public money then lets fund feral pig shooting.

  3. The motorsports do cost a lot of money, but then again we do already waste a lot of money on many other economic black holes (Centrelink, Medicare etc), so I don’t really see the difference.

    I would support removing all funding from motorsports and the AIS. I also believe we should slash funding to the arts. Most artists have absolutely no talent, but that doesn’t stop us from squandering millions of dollars on these glorified finger-painters. And music as well, we should slash funding to that. Currently we have a bunch of no-talent, unwashed experimental muscicians engaging in “spontaneous performance art” and receiving grants to stuff around with feedback loops and out-of-tune instruments.

  4. The downunder cycling tour in Adelaide and SA has been quite fun. Probably cheaper to run than a CBD car race too.

  5. @Sea-bass

    I also believe we should slash funding to the arts. Most artists have absolutely no talent, but that doesn’t stop us from squandering millions of dollars on these glorified finger-painters. And music as well, we should slash funding to that.

    Here I’m cautious. If the funding is for education or research then I have no problem with it. And if it’s purely community level stuff, fine, as with sport. If it’s for elite public performance, then I’m against it. Let them get the money from those interested.

  6. I tend to agree with the sentiments of the first post, but I’d add that if we want to fund sport, then the focus should be on community sport, health, fitness and child sport.

    Obesity and over-weightness are major public health problems and directly decrease quality of life. Obesity has also been shown to have a negative impact on a person’s wage. Sitting on a sofa watching the game will never beat getting out there and playing it. I’d rather a sustained and serious effort by government to encourage people of all ages to get more active.

    (The ‘do 30 minutes’ campaign, or whatever it is, is hardly a serious effort, though its in the right direction)

  7. I would have thought the QLD example of losing a race that is actually less toxic to the environment in place of fuel guzzling ‘supercars’ (holdens/fords) would have also been an example you could have used.

  8. I have no problem with governments funding community sports. However the racing car sports inevitably encourage hoons to haunt suburban streets and contribute to the road toll, racing cars are greenhouse producers and there is a lot of drinking and bad behaviour after the races. Can it be called sport? Isn’t it more like a circus and so should the question be should the government fund circuses?

    The downunder tour is a sport which leads to a healthy activity and doesn’t create carbon pollution like the fast cars.

  9. @Jill Rush

    I’m not so sure of that Jill. The bike-riding is accompanied by lots of support vehicles and of course the carbon-footprint of the tranpsort and promotion and back-end would be huge.

    Not as huge as F1 of course, but huge all the same.

  10. Good grief, almost universal agreement. Must be a first.
    The spending on elite sports – mostly Olympic sports – is simply buying medals. Though I don’t think this is a good way to spend taxpayers’ money, I suspect that a majority of public opinion might believe it money well spent.
    JQ’s original point, about car racing, is more peculiar. It is very much a minority interest in Australia – and poor television. Yet almost all state governments have fallen for it. NSW is that latest with races at Olympic Park. V8 I think.
    Beats me.

  11. The government should only invest in sporting events where its ability to borrow cheaply gives it an edge in financing costs. Also where the opportunity cost of both public infrastructure and community services is not excessive. Any externalities included in the cost-benefit analysis need to be proven as pecuniary. Vague statements about “raising our international profile” dont count.

  12. In Tasmania there is a Targa rally around the island state and anyone can volunnteer their time at check points to help the drivers of the $2 million cars on their way. It’s not elitist at all.

  13. At least the Supercars aren’t beset by a hideously corrupt and venal entrepeneur, a la Bernie Ecclestone.

  14. Is there something especially appealing to the middle-aged decision makers about a sport that can be played sitting down with an engine doing all the work?

  15. @Sea-bass
    Seab bass says “we already waste a lot of money on other economic black holes (centrelink, medicare etc..)

    Sea Bass …if only I could find a big enough black hole for you. My trouble is – it would have to be deep down in the prehistoric bedrock somewhere.

    We HAVE wasted an incredible amount of money on private sector unemployment job agencies who put their hands up for Govt subsidies, whilst slugging the unemployed for useless training fees, though.

  16. @Fran Barlow
    What’s elite performance and what’s not? What is research in the context of sound art or visual art? My guess is neither you (nor sea-bass of course) have much idea at all about the Arts and what constitutes significant work nor much theory on the social function of Art.
    Still, artists are such an easy target.

  17. Coincidentally(?) the current Inside Story has a good analysis of the dubious pursuit of “elite” sport, pointing out:
    “In 2007–08, $80 million was spent on “Outcome 1”: community participation in sport. “Outcome 2” is “excellence in sports performances by Australians,” of which the AIS programs are the most important part. It received more than $171 million. In spite of the rhetorical commitment to support sport as part of a healthy lifestyle in the wider community, it is elite sporting programs that consume more than two-thirds of the public money directed to the area.”
    And whatever you can say about the inflated price of Olympic Gold goes quadruple for motor sports (more elite; more expensive; less physical-health promoting; encourages fossil fuel consumption).

  18. Peter Wood #6 could be onto something – after all the demographic most likely to be into Grand Prixes and the like is the same demographic which is influenced to buy products by TV commercials with jingles along the lines of “Don’t wanna grow up”, “zoom zoom zoom”, etc., and it is well known amongst major party campaign directors that most election campaign advertising is targeted at the stupidest 15 per cent of the electorate.

  19. My helpful suggestion is: make the car racers welcome even to the point of a little public purse support to race hybrids, fuel cell electrics, bicycles, whatever smart modern technology they fancy. But let them leave the fossil foolish junk back in the 20th century.

  20. Thanks for this post John – I’ve longed for the lies about such events to be exposed.

    While I’m guilty of producing a few in my time, I’m always amazed at how cost-benefit analyses are unquestionably used to justify and argue for such events.

    You’ve already pointed to the nonsense that puts a dollar value on the “international exposure” that such events generate – without any proof that, say, 30 seconds on the US news has any effect what-so-ever on international visitor numbers. The assumption seems to be that such coverage can be equated to the effect of targeted product advertising.

    I’d add to that, the nonsense that $X expenditure during such events has a real economic impact. Given that the vast bulk of spectators at such events are local, I’d love to see the impact measured over months rather than one weekend – I know that if I blow a couple of hundred dollars at a one-off event, that’s money I’m not going to spend on “regular activities” for the next couple of weekends.

    Finally, even if such events fill all of the motel rooms and restaurants for the weekend – does that really improve the viability of such businesses or the local economy. Surely government investments that have an on-going impact are much more worthwhile??

    Could it be that this cost-benefit mumbo-jumbo is another reason why economists are considered “dismal scientists”.

    Oh!, and one other thing – why do such cost-benefit analyses never include a comparison of the outcomes if the investment were to be spent on alternative activities ???

  21. A name for the class containing proposals like #24: “picking losers”.
    It could be implemented as an encouragement to better behaviour, a Pigouvian tax on stupidity.
    “You insist on racing dumb technologies around in our environment then you pay us. Or smarten up a little and we might even be able to help you out with something”.

  22. I’m not particularly for or against motorsport; however it seems like it should be capable of standing on its own two feet. As a few others have said, it would seem better to spend that kind of government money on bike and/or walking tracks, public ovals and parks, and so forth. A bit of encouragement for people to get out and about. The economic benefits are less tangible and more diffuse over time, being more about preventative health measures rather than increased tourism at race time.

  23. @nanks

    What’s elite performance and what’s not?

    It would be simple enough to define: e.g. more than two full time equivalent paid staff per 1000 participants; sponsorship of more than AWE per participant; subject to WADA rules; detailed systematic coverage on pay or FTA or licenced braodcasters with 5% of audience or more; broadcast outside jurisdiction of event to live audience greater than number of participants;

    What is research in the context of sound art or visual art?

    Any program of adequately supervised study that would meet current Australian Research Grant rules.

    As it happens, my partner teaches in the humanities and is doing a PhD in the field so I do have some grasp of these issues.

  24. John,
    Would be interested in your thoughts behind the economic argument put forward by event organisers, advisors, and by state and Comm govt. ie quantifying economic benefits any event actually brings to the state under the premise of international visitors ariving on our shores to spend big, boosting retail, accomodation and supporting the tourism industry. I believe the premise largely is a myth as it is likely to be local and instate visitors spending the money to support the corporations behind the events. As much as I enjoy letting the redneck inside me loose to watch Bathurst etc why not divert funding to major international science events showcasing Australian and international smarts. May also be a way of impeding the scientific leakage to other countries. Otherwise might as well put on a world championship tiddly winks event for all the real value the major sporting events bring into Australia.

  25. @Fran Barlow
    looking at your post it doesn’t look much like it Fran – what you are proposing is the removal of funding to all fine art – visual/music/performance in Australia. Of course that may be your goal – certainly a dismissive ignorance of creative arts is quite common.

  26. JQ – Australian governments that speak in favour of free market liberalism universally support things that are nothing of the sort. The conclusion I draw is that Australian governments are social democrats and they like the power to pick and choose what money gets spent on. Most political rhetoric seems to be more about presentation than real intent.

  27. @nanks

    But is it elite performance or not, nanks? I doubt that much of it would qualify as elite. The SSO might though I’m not so sure, following the criteria above.

  28. My point would be Fran that your criteria are junk and would not be acceptable to anyone with any long standing knowledge of the Arts as a practitioner or theoretician. I don’t include the Creative Industry type hacks who typically come from sociology or film studies and adopt a bums on seats criteria of value where All Saints is more important – as an artwork – than Warwick Thorton’s Samson and Delilah.
    To give a simple example – indigenous visual art is the only visual art from Australia with any international profile. It would not qualify as elite under your criteria. Elision – one of the major contemporary music ensembles of its kind, with significant international reputation and exposure – would not qualify. A composer such as Liza Lim – again with major international exposure – would not qualify under your scheme. But again that may be your point – this sort of art shouldn’t exist or shouldn’t receive any public funding.
    The Premier of one state once told me – If people want higher education they can go somewhere else. I guess you feel the same way about artists working at the highest levels of innovation and achievement. There’s a strong tradition of that in this country.

  29. @nanks

    Apology accepted.

    I’m not sure of the point you’re making though. It’s the elite stuff that doesn’t qualify. If the people you cite aren’t elite then they qualify for support, IMO. So the bulk of what would be the art you were considering would almost certainly qualify for funding, at least in principle.

  30. As I understand it (although it is second hand knowledge), the Victorian Government uses a slightly different methodology for the cost benefit analysis of the Grand Prix compared with other major events in Melbourne. The result is that it paints the Grand Prix in a more favourable light.

  31. JQ asked “What is it about governments and car races?” It’s a good question and there are a few matching questions like;

    “What is it about governments and elite sporting events/venues?”
    “What is it about governments and land developers?”

    The answer would seem to have something to do with corporate donors (of money and favours) to the political industry.

    It is revealing that we have nearly unanimous agreement above (as another poster has pointed out). “Left” and “Right”, “socialist” and “liberal”, “green” and “brown” all seem to agree that subsidising car races is a complete waste of public money. Our emphasis on reasons might vary but our conclusions are unanimous.

    Are we a representative sample of the Australian public? Or is there a majority of yobbos out there in favour of it? Or is it something cooked up by a cosy little group of corporate types and pollies looking after each other with public money?

  32. A suggestion; instead of cutting funding for elite sport, can we cut spending for professional sport and let governments support amateur sport (if they wish).

    Motor sport doesn’t need to have majority support to draw government support. It is common practice for governments to expect a vote winning result from supporting a collection of minority groups.

    One of these minority groups is professional event organisers. If a government gives them a handout and is prepared to accept a somewhat biased post-event report that shows a good financial return (albeit possibly just for the organisers) then they have bought three minority groups (promotors, competitors and spectators) with the one spend.

  33. Good questions Ikonoclast and quite right Charlie Bell. People love races and enjoy the vicarious pleasures it brings. The solar car race is the current example. The population (ie voters) do not look too deeply at those things which give them pleasure and car races do that. The governments feel it is likely to enhance their votes as that good feeling transfers (in theory) to the government which provided the adrenalin rush. The governments around the nation are not only supporting motor sports which are high in carbon pollution but also soccer and various types of football with taxpayer funding.

    Buying the votes of sports fans may be crude but it is probably highly effective unless those who disagree rise up as a group to counter the impact of large numbers of sports fans. Ask them and it is always money well spent. There is no getting away from the crowd’s love of the drama and unpredictability of any kind of race but it would be good to try and direct this towards those sports which lead to less harmful outcomes. More foot, bike and solar races and less with rev heads in mind.

  34. Tin Tin,
    Right on. Indy is a waste of money, sure, but so are a lot of things. I was down at Surfers on the weekend and I’d like to see the the happiness of all those bogans quantified in a CBA. Why shouldnt motorheads get a taste at the taxpayer funded table like everyone else?

  35. @Joseph Clark
    “Why shouldnt motorheads get a taste at the taxpayer funded table like everyone else?”

    But everyone else doesn’t. As the post points out, motorsports get much better treatment than other sports. Of course, for the kind of ideologue who sees an industry handout and a publicly-funded hip replacement as being equally objectionable (see also @Sea-bass ) this doesn’t matter.

    But if you hold this kind of ideological viewpoint, you ought to refrain from commenting on public policy of any kind, and stick to designing anarcho-capitalist utopias. That way, your ideals won’t be corrupted by reality.

  36. @jquiggin
    I thought I was being very pragmatic by temporarily forgetting about anarcho-capitalist utopias to talk about public policy. You should give me more credit 🙂

  37. @jquiggin
    To your suggestion — funding entertainment for affluent, well exercised middle aged people might seem like a more civilised use of public money, but is it really fair? Bogans have feelings too, you know.

    You’re probably right that Indy provides less benefit than many alternatives. How about Tin Tin’s suggestion of a bikini competition?

    I think I’m starting to get the hang of this social democratic game of dividing public money by estimating people’s utility. The best part is when I cheat by camouflaging my own morals as measures of public benefit.

  38. @jquiggin
    But thinking is so hard! Can’t I just be stubbornly ideological and not listen to anyone who has different views like I usually do?

    Seriously though, I do appreciate you standing up for taxpayers, even if it is a little half-hearted.

  39. jquiggin@#43 October 27th, 2009 at 11:11 says:

    But everyone else doesn’t. As the post points out, motorsports get much better treatment than other sports. Of course, for the kind of ideologue who sees an industry handout and a publicly-funded hip replacement as being equally objectionable (see also @Sea-bass ) this doesn’t matter. Motor sports come under the head of government major projects like Olympics and Football tournaments.

    From the point of view of utilitarian public finance it does not matter whether the government proposes to sponsor poetry v pushpin or hip-replacements v grand prix. What counts is the net present value of the activity. They should be assessed using cost-benefit analysis that takes into account public externalities, both economies and dis-economies, they generate.

    If there is a net benefit to the project then this can be used to fund as many hip-replacements as you like. If not then the project comes at the cost of sick peoples pain.

    My own observation is that most of these affairs tend to run at a loss and that their economic justification relies heavily on the externality argument. Which are necessarily vague, subjective and hard to measure.

    In the case of the Victorian Grand Prix the deal looks especially dodgy. The Age reported Auditor Generals report on the economics of the Grand Prix which indicated that the public benefits of government sponsored Grand Prix are vastly exaggerated. Reportedly, social costs exceeded social benefits by $6.7 million:

    Raising further doubts about the benefits of the race, economic modelling commissioned for the Auditor-General concluded that costs exceed benefits by between $800,000 and $13.4 million, after factoring in social and environmental imposts such as noise and traffic jams. According to the study’s best estimate, costs exceeded benefits by $6.7 million, the audit office said.

    A second study, also included in the report, estimated that the Grand Prix increased Victoria’s gross state product by about $62.4 million — more than 2½ times less than the Government’s claim that it directly adds $175 million to the economy.

    The Age believes that in a tense exchange, the corporation was challenged by the audit office to produce figures backing its claims about intangible benefits, but failed to do so.

    The Grand Prix management hit back with a letter claiming that the report failed to take into account “intangibles”:

    In a written response, the Grand Prix Corporation attacked the audit office for… failing to recognise such benefits as international branding for Melbourne, civic pride and business investment.

    Call me a hardened cynic but these intangible benefits look pretty fluffy to me. Lets face it, Melbourne’s a nice city to live in, although getting over-crowded, but it is never going to be in the international jet-set stakes.

    The claim that the event will add to Victoria’s Gross State Product by $62.4 million has to be set against the out-of pocket expenses of subsidizing the thing. A large chunk of which ends up in the pocket of Bernie Ecclestone, who seems rich enough already and does not exactly throw his money about in the local economy. The Age reports that Ecclestone’s Alpha Prema group will get $47 million for allowing tax-payers the privilege of hosting this event:

    The Age can reveal that this year Victorian taxpayers will part with $47 million, simply for the privilege of hosting his car race.

    Formula One supremo Bernie Ecclestone will take home a record fee from Victoria for the Australian Grand Prix in a fortnight…Formula one is the platform on which Mr Ecclestone has built his personal fortune, recently estimated at $5.2 billion.

    The actual amount that Bernie will pocket is a closely guarded secret, “commercial-in-confidence”. (It appears that the Victorian government’s much touted Bill of Rights does not give its citizens the right to poke our noses into these affairs. Knowing the moral bankruptcy of contemporary liberalism, I am not surprised.)

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