The economic impact of the 2011 Formula 1 ... - Tourism Victoria

6. Wider economic impacts using the CGE
approach
6.1 Implementing direct impacts into the MMRF CGE model
Ernst & Young commissioned the Monash University Centre of Policy Studies (‘CoPS’) to
model the economic impact of the 2011 Grand Prix.
The CGE modelling approach used was a comparative static analysis. That is, comparing the
state of the economy (at equilibrium) with the Grand Prix, and the state of the economy
without the Grand Prix in 2011 (all else remaining constant), and then estimating the
changes in economic aggregates.
The current state of the economy (with the Grand Prix) was compared against two
scenarios, being:
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Scenario 1 – the Grand Prix held in another State in Australia; and
Scenario 2 – the Grand Prix held in another country.
The input of the direct impacts estimated in section 5 into the MMRF CGE model is
described below.
Please refer to section 3.1.6 for those impacts not included in this economic impact of the
Grand Prix.
Foreign visitor and interstate visitor expenditures
Incremental foreign visitor and interstate visitor expenditures (excluding their expenditures
with the AGPC) are treated as exogenous shocks to the economy.
This is treated in the MMRF as a shift in foreign and interstate accommodation, cafes,
restaurants; transport; and retail expenditures away from the Victorian economy of $26.5
million to the rest of Australia and $15.6 million to overseas (under both scenarios).
Retained expenditures
Retained Victorian expenditures (excluding their expenditures with the AGPC) are treated as
exogenous shocks to the economy.
This is treated in the MMRF as a shift in Victorian expenditure on accommodation, cafes,
restaurants; transport; and retail expenditures away from the Victorian economy of
$7.7 million to the rest of Australia (Scenario 1) and $2.2 million to overseas (Scenario 2).
AGPC operations
AGPC operations are introduced into the MMRF model as a miniature or ‘dummy’ industry in
the MMRF database. In the model, the AGPC ‘industry’ is connected to the MMRF sectors by
it selling goods and services to businesses and households (the AGPC industry’s outputs)
and purchasing good and services from other industry sectors (the AGPC industry’s inputs).
Incremental revenue to AGPC industry (i.e., tickets, food & beverage and merchandise
royalties, etc.) is the sum of revenues sourced from Victorian, interstate and overseas
customers. For Victorian customers, only the retained component was considered. Victorian
revenues regarded as being sourced from diversions from other Victorian sectors were
excluded.
Tourism Victoria
The economic impact of the 2011 Formula 1 Australian Grand Prix Ernst & Young ÷ 52