The rejection by Queensland Premier Steven Miles of his own independent Olympic venue review and its recommendation for a new centrally located $3.4 billion stadium at Victoria Park is a mistake borne of confused policy objectives and mistaken policy appraisal.

The Premier has instead favoured the $1.6 billion QSAC (formerly QEII Stadium) refurbishment of the ‘temporary aluminium seating from the 1982 Commonwealth Games’ and an additional $1 billion to keep the Gabba on life-support. While this option looks cheaper, there are other factors to consider – like maintenance costs and the additional transport infrastructure required to get patrons to QSAC stadium located 10km south of Brisbane’s CBD, whereas the Northern Busway and the Cross River Rail upgrade are both adjacent to Victoria Park.

But, more importantly, the benefits of each option are vastly different and it is obvious to anyone who reads the Quirk Review of Olympic venue options – which is a sober evaluation of the options against clearly defined criteria – that the Gabba and QSAC are non-starters because of a combination of age and dereliction, refurbishment costs and risks, space constraints limiting functionality and expansion, and less than ideal location. As the Quirk Review specifically concludes, ‘[The] QSAC Stadium should not be used as an Olympic and Paralympic Games venue to host the track and field events.’

The Queensland government’s decision to ignore that recommendation is founded on a basic error in the way it has assessed the project, essentially departing from the fundamental principles of cost-benefit analysis. This is not about whether it was sensible or not to bid for the Olympics – a legitimate question when Queensland’s net debt will rise from 6.7-54.8 per cent of revenue between 2022-23 and 2026-27. But the commitment to host the games having been made, and neither Labor nor the LNP intending to resile from it, the decisions they make from now on should be designed to secure the greatest net benefits.

That needs to be considered in a perspective that goes well beyond the 2032 Olympics. Seen in that perspective, the renovation option is not actually an alternative to building a new fit-for-Brisbane stadium but merely a way of postponing it: given the limitations of the existing site, refurbishment only defers the new build’s timing.

As a result, the relevant comparison is not between the outlays for refurbishment and those for a new site, but rather between (a) renovating for 2032 and building a new facility later, versus (b) not renovating but instead building a new facility for 2032. Equally, the benefits streams are the benefits of greater capacity from 2032 (under the new build option), versus less capacity from 2032 with an increase sometime in the future.

The greater net benefit of building a new facility would then come from (i) avoiding the renovation cost, albeit at the expense of a higher immediate outlay, and (ii) having greater capacity, better functionality, and better location, immediately.

But that’s not the comparison the government has made. That it hasn’t highlights the ever more lamentable quality of infrastructure evaluation in Australia. Even the relatively recent changes to Infrastructure Australia’s assessment guidelines have not strengthened the quality of political decision-making. Given the fact that infrastructure funding is heavily underwritten by the Commonwealth – which will pay more than 50 per cent of the Olympic Game’s capital costs – the resulting losses are borne by all Australians, and not simply those in the relevant state or territory.

Nevertheless, the Premier is keen to save a few dollars – to look fiscally prudent during a cost of living crisis and election year – by renovating the aluminium amphitheatre and marginally increasing seating capacity at the Gabba. In reality, with Queensland construction costs rising at more than 1.5 times the Australian PPI since 2000, those purported fiscal benefits are likely to be more than wiped out when the time for the new build comes.

In short, the government’s decision is a soup of confusion. It confuses the response to the immediate cost of living issue with the appropriate approach to long-term infrastructure investment. It mistakes what are at most short-term fiscal costs with long-term economic costs. And having committed to the 2032 Brisbane Olympic Games, it foregoes whatever gains it may bring by choosing, without proper analysis, a low-quality option that severely reduces its legacy benefits.

Renovating the old QEII Stadium is turning back the clock to the early 1980s. If this happens, then like the Queensland Premier says, it certainly will be ‘a different kind of legacy’.

Joe Branigan is an economist