The state will continue to fund housing and world-class sporting facilities promised as part of the games, mainly A$2 billion on facilities and A$1 billion on affordable housing, even as it pulls out of the event.

Premier Andrews said the state government would soon provide an “accounting” for the blowout, as questions emerge whether it was due to poor budgeting on a complex and untested multi-city model where various regional towns would be used to host events, or if the costs were hit by inflation.

At a lengthy press conference on Tuesday, Premier Andrews said the rising cost of living that was hurting many Australians made it difficult to justify hosting the games.

“You’ve made your best estimates … and you go and do the work in a pretty volatile economic climate and you get actuals … Do you push on and deliver this at any cost? Take your money out of hospitals and schools and roads, out of all manner of different things to pay for it, or do you make the decision we’ve announced today?” he said.

“The cost of this is at least A$6 billion and potentially substantially more than that, and I simply will not spend that on a 12-day sporting event.”

Andrews also alluded to the fact there could be several kinds of blowouts.

Stadium and housing upgrades already accounted for some of the rising construction costs, and there were unforeseen expenses “in terms of services, security, transport … bills that will be paid to contractors to those who provide services to those who do all the logistics”.

Andrews added the state would also save on the costs of taking down temporary buildings erected for the games that could stretch months after the event.

Australia axes 2026 Commonwealth Games, blames ballooning cost of hosting event

A statement by the CGF also offered clues on the blowouts, referring to “price escalation” surrounding “village and venue builds, and transport infrastructure”.

Andrews’ critics have accused him of tarnishing Australia’s international reputation, while the federation and Commonwealth Games Australia accused the Victoria government of “gross exaggeration” of the cost overruns and blindsiding them on the decision.

The chief executive of Commonwealth Games Australia also said the government had ignored its recommendations to reduce costs by holding the competitions only in Melbourne, but Andrews on Tuesday said his government had exhausted all alternative plans.

Tom Heenan, a lecturer in sport and Australian studies at Monash University, said the cancellation showed that hosting mega-events like the Commonwealth Games was not worth it. “This venture was flawed from the start. Situating the games in regional centres highlighted their declining global importance,” he said.

Other states have declined to replace Victoria in hosting the event, all citing prohibitive costs.

Perth Mayor Basil Zempilas said in a local interview it would only host at the right price, not A$7 billion (US$4.7 billion). New South Wales Premier Chris Minns ruled out the opportunity instantly, saying the state’s fiscal position was tight.

Over the years, there have been few takers to host the games, and Victoria was the only formal applicant for the 2026 event.

Others accused Andrews and his government of mismanaging the state’s finances.

Additional reporting by AFP