Qld Treasury must be very worried about Olympics cost blowout

The Queensland Treasurer is being criticised for not being a team player on the Olympics (e.g. in the Courier-Mail), but what he’s being criticised over is, in my view, Cameron Dick’s finest moment in the job so far. InQld has a good summary of the dispute between Treasurer Dick and the Brisbane Lord Mayor over a media centre for the Olympics at South Brisbane which the Council has fast-tracked. The Treasurer says it will displace an existing factory and will cost jobs (That didn’t take long: Dick lashes council over Olympics development plans). While criticising the Council on talkback radio, the Treasurer provided a great talking point about Olympics’ cost blowouts. InQld reports:

“The mayor of Montreal wrecked that city, it took them 30 years to pay back the debt for a 13-day Olympics. We just can’t have that in Queensland,” he [i.e. the Queensland Treasurer] said.

“We’re six days into a 4000 day project. Let’s take out time to do it right, get the (Olympics 2032) organising committee established. The mayor will be on that but he’s not running the committee.”

It looks like the state Treasurer has been briefed by Queensland Treasury on the likely massive cost blowout associated with the Olympics.

Incidentally, former state Treasurer Jackie Trad recognised the very large opportunity cost of the Games and expressed reservations about the Olympics in Cabinet, but the Premier ended up getting Cabinet support for the bid. The Courier-Mail has reported Claims Palaszczuk told cabinet they would not leave without Olympics bid approval:

…Trad was at the zenith of her power. She had the numbers in the caucus and cabinet. With the ­unions in her ear saying an Olympics would be too expensive and the money would be better off spent on more public sector jobs, the move was on to scuttle the bid.

I’m relieved that our current and former state Treasurers, and I’m guessing Queensland Treasury, are concerned about an Olympics cost blow out and the huge opportunity cost of the Games. Alas, the Treasury can’t provide any back-room number crunching it has done.

As noted in a great Rear Window column in the Financial Review, the government hasn’t provided a proper cost-benefit analysis of the Games. It’s had KPMG estimate nearly $18 billion of benefits, but the consultants didn’t tally up the costs or “disbenefits” as KPMG labelled them. As the Rear Window columnist Myriam Robin expertly observed:

Readers of the [KPMG] report are left unenlightened of what said “disbenefits” will be, or whether the money and effort would be better spent elsewhere (the aforementioned “opportunity costs”). They are thus utterly unable to mount any informed argument about whether or not hosting the circus is, economically speaking, worth it.

Brisbane City Council may not care as the state and federal governments and hence taxpayers across Queensland and Australia will be paying the bulk of the costs. But as Queenslanders and Australians, even those of us who live in Brisbane should be very concerned about the potential economic loss from the Games.

Olympic rings. Original author: Pierre de Coubertin (1863-1937), Public domain, via Wikimedia Commons

Please feel free to comment below. Alternatively, you can email comments, questions, suggestions, or hot tips to contact@queenslandeconomywatch.com

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4 Responses to Qld Treasury must be very worried about Olympics cost blowout

  1. grahamy01 says:

    I think Cameron is playing politics. Where was he when the Premier sprang the revamped Gabba on the Feds and dared them not to pay for half of it? You will be interested in some of the research I’ve been doing and the Oxford University paper from last year that predicts these events will always run well-over budget because of their inherent characteristics. Some details in the AFR today https://t.co/a3GIqzqf8f?amp=1

  2. Glen says:

    One way of ensuring costs don’t blow out is the federal government demanding the Qld govt scrap it’s union deal that ensures any state govt funded project is a union only site and the pay and conditions are enormous. It was this deal that caused the Townsville stadium to blow out by 30%, the federal Govt need to be firm on this.

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