Former US president Dwight D Eisenhower famously warned of the dangers of the “military-industrial complex”. He foresaw that the “conjunction of an immense military establishment and a large arms industry” would create something so wealthy and powerful that its economic and political influence would be “felt in every city, every state house, every office of the federal government”. And the job of savvy people was to be on guard against that influence dominating every damn thing, from starting unnecessary wars to completely corrupting politics.
Is there a mild equivalent in Australia in the third decade of the 21st century?
I thought you’d never ask.
On a bad day, do you think there might be an “unholy alliance” between sport, politics, media and business which achieves outcomes out of kilter with what the people actually need? As in, if you accept the ancient Roman dictum that “two things only the people anxiously desire – bread and circuses”, might it be that when the four powerful entities that specialise in circuses get together, the inevitable result is we get more circuses, even when people actually need more bread?
Stay with me! See, in this space, I might have mentioned once or twice the horrors of #StadiumSplurge? As you will recall, if left unchecked it would have led to two relatively modern Sydney stadiums knocked down and rebuilt at a cost of about $2 billion. It was fabulous for the sports to get state-of-the-art infrastructure at no cost, wonderful for the media organisations who have the broadcast rights in new stadia, and lucrative for business across the board. It was only because of the public outcry over putting so much money into sport at the expense of hospitals, schools, flood relief etc, that the politics went sour and the state government pulled back from knocking over the former Olympic Stadium in Homebush.
But it is happening again.
An artist’s impression of Brisbane Live, a proposed venue near Roma Street that could host Olympic events.
This week, the Feds and Queensland announced a joint $7 billion funding agreement to overhaul Brisbane’s sporting and event venues, including the Gabba, before the 2032 Olympic and Paralympic Games. According to the ABC, the Commonwealth will contribute about $3.5 billion to the deal.
I repeat: $3.5 billion! For the Sydney 2000 Games, the Feds paid, according to the federal parliament’s 2021-22 budget review, $150 million. This was just 8.2 per cent of the total construction cost of $1.84 billion, which was the equivalent of about $3 billion at the time of the review.
All the more surprising is that in the original bid, a key feature was that south-east Queensland would be able to leverage existing infrastructure to hold the Olympics for a total cost of … $4.45 billion.
Umm, if the cost has gone up by $2.55 billion since July 2021 when the winning bid was announced, how much do you think it will actually cost by 2032?
And yes, of course the initial projections said it would deliver more than $8 billion in economic benefits. Initial projections always say things like that. And pretty much in the history of the modern Olympics, they never turn out like that. But ask yourself this:
If by spending a decade building specialised venues for a two-week sports festival you really could make billions more than you put in, if there was any history of that actually anywhere in the world, ever, doesn’t it seem odd that when they got to the final bid, Brisbane was the only city left with its hand in the air?
Or do you think history actually shows initial budgets blow out, the money never comes back the way projected, and – because of that – most potential bidders to be Olympic hosts run screaming from the room once they look at the numbers?
Don’t take my word for it.
An artist’s impression of the new Gabba stadium and concourse, with a walkway to the Cross River Rail and Metro stations to the left.
About a year ago, an economics researcher by the name of Rodney Bogaards wrote an academic treatise for the federal parliament on the history of financing and reward at the Olympic Games. He specifically looked at whether Brisbane could buck history by basing its bid on using the “New Norm” principle of using existing infrastructure.
He concluded – and remember this was before Brisbane appeared to decide that its existing infrastructure needed $7 billion of tarting up – it was unlikely.
“The history from cities that have hosted Olympic Games suggests 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,” Bogaards said in his report.
“These cost overruns can have fiscal implications for years into the future: for example, 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 experience of these and many other host cities suggests that Australian decision makers should be alive to the risks of optimism bias. In this context, and even applying the ‘New Norm’ changes, with limited cost information available and contestable benefit estimates, there remains considerable uncertainty as to whether the benefits of the Brisbane Olympics in 2032 will outweigh the costs to the community. Given the substantial costs involved, prospective host governments should ensure a rigorous and critical assessment of costs, benefits and risks before committing to host the Olympic Games.”
I wouldn’t say that when you translate his academic rigour into colloquial English he’s saying the level of expenditure is “batshit crazy”, but bearing in mind costs have already gone from $4.45 billion to $7 billion – let me say it instead.
