Not so fast: Economic report questions value of Brisbane Olympics

An economic research report has cast doubt on the 2032 Olympics in Brisbane claiming there was considerable uncertainty whether the benefits of the Games would outweigh the costs to the community.

Mar 31, 2022, updated Mar 31, 2022
A report has cast doubts over the benefits of the Olympics (Photo: AAP PHOTO / ROD TAYLOR)

A report has cast doubts over the benefits of the Olympics (Photo: AAP PHOTO / ROD TAYLOR)

The report by a senior researcher in the Federal Parliamentary Library said there was little detail on the cost of the Brisbane Olympics and a brief 24-page evaluation summary did not include a comparison of costs and benefits.

The operational costs for the Games have been estimated at $5 billion, but the report said direct capital costs had not been quantified nor had indirect capital costs. A KPMG report found social and economic benefits for Queensland of $8.1 billion. 

But the parliamentary report said criticisms could be made over the KPMG report including the fact that it did not include what benefits would have occurred without the Games.

“Beyond these technical limitations, almost half the estimated benefits to Queensland and over half the estimated benefits to Australia are generated by intangible social benefits that are inherently difficult to quantify with any measure of certainty,’’ it said.

There have been reports showing there would be an economic uplift from the extra tourism ($3.6 billion) and trade ($8.6 billion) while 115,000  jobs would be created. 

But the Parliamentary report said it was impossible to assess the likelihood of achieving the predicted benefits to international trade tourism and trade.

“Perhaps of greatest concern, the KPMG analysis does not address the likely costs of the Games to Queensland and Australian communities,’’ the report said.

“That is, KPMG only quantifies benefits, so it does not provide a balanced assessment of the economic and social impacts on communities of hosting the Games.’’

The Parliamentary report quoted Brisbane economist Gene Tunny who said he suspected the reason there was not a full evaluation report was because it would raise too many questions about the merits of the Olympic bid.

“It’s clear that the State Government committed to bidding for the Olympics without having a firm idea what it would ultimately cost Queensland taxpayers,’’ Tunny said.

“Anyone who has seen how investment decisions are made in private sector companies would be appalled by this lack of feasibility analysis and due diligence.’’

That valuation report said costs would be offset by funding from the International Olympic Committee and revenues.

But the parliamentary report said there was no information provided in the Government’s valuation proposition assessment report on the expected size of funds from these sources.

It also said there could be tensions over the infrastructure for the Games.

“The Olympic Infrastructure Agency will have the difficult task of identifying and balancing numerous (and sometimes conflicting) interests and objectives across community groups, businesses and governments to achieve the best outcome for the overall community. 

It cited “a rather jaundiced view’’ from one researcher summarising his experience of cities hosting mega sporting events: “In either democratic or authoritarian countries, the tendency is for event planning to hew closely to the interests of the local business elite.”

“Construction companies, their unions, insurance companies, architectural firms, media companies, investment bankers, lawyers, and perhaps some hotel or restaurant interests get behind the Olympic or World Cup project. 

“All stand to gain handsomely from the massive public funding. Typically, these interests hijack the local organising committee, hire an obliging consulting firm to conduct an ersatz economic impact study, understate the costs, overstate the revenues, and go on to procure political consent.’’

Brisbane’s approach of spreading the games across clusters on the Gold Coast and Sunshine Coast was also questioned.

A US economist quoted in the report said: “Although they call it a Brisbane cluster, it’s not really a cluster. The venues are all over the place.’’ 

“That means you have to build connecting transportation, and whether you do that in ways that are beneficial to the city’s needs or are just beneficial to the need to connect venues is an important question.”

The report also said that in regard to sports participation, “there is no reliable international evidence that indicates the Olympic Games raises sport participation levels for a host country’’.

It said the history from cities that have hosted Olympic Games suggested a common tendency for overly optimistic estimates of the benefits, and underestimation of the significant direct and indirect costs, which has frequently resulted in large cost overruns.

“Montreal took 30 years to pay off the debt incurred by the 720 per cent cost overrun on the 1976 Olympic Games. Cost overruns and associated debt from the Athens 2004 Olympics weakened the Greek economy and may have contributed to the country’s deep financial and economic crises for the next decade,” the report said.

Local News Matters

We strive to deliver the best local independent coverage of the issues that matter to Queenslanders.

Copyright © 2024 InQueensland.
All rights reserved.
Privacy Policy