Putting the Olympics' Pricetag in Perspective

Since there's been a lot of talk lately about Olympic construction cost-overruns, and the supposed 'waste of public funds' for what is 'nothing more than a two-week party', we thought we'd take a closer at the numbers behind the 2010 Winter Games.

Indeed, when one hears that it will cost about $1.7 billion to put on the Olympics, or that the Vancouver Convention Centre Expansion project is $235 million over-budget,  it does sound as though there's a lot of money being thrown around on the Games and related projects (ie: the Canada Line, the Sea-to-Sky Highway, etc.)

• Total cost of Olympics: $1.7 billion
• Of which, $580 million will be spent on venues
• Another $200 million is earmarked for security

Essentially, we taxpayers are on the hook for the $580 million that's been earmarked for venue construction and upgrades, although we'll get to use the facilities long after the Olympics are over (ie: the UBC rinks, the Richmond Oval, etc.)

As for the rest of the $1.7 billion budget, including security - that will be covered by the sale of broadcast rights, corporate sponsorship revenues and ticket sales. To date, VANOC has raised at least $550 million in sponsorship deals, with a few major sponsor categories still to be filled.

It's also worth considering that this isn't just a 'two-week party,' as many critics like to suggest.

The Games will showcase Vancouver to a global audience of more than 1 billion people, and for a province where tourism is a $10 billion industry, the OIympics will indeed be paying dividends for years to come.

But to see Olympics-related spending in another light, below are the five largest categories of federal government spending, according to the 2005 budget.

• Interest payments on the national debt - $34.1 billion
• Support for seniors (Old Age Security, etc.) - $27.9 billion
• Health Care transfer payments - $15.2 billion
• Employment Insurance (EI) - $14.7 billion
• Social assistance, education transfers - $7.9 billion

The federal government also provided nearly $12 billion in tax benefits and other cash payments to low- and middle-income families during 2005.

It's important to keep in mind that this is what the federal government spends each year.

So, during the 2004-2010 period (during which most of the $580 million in taxpayers' money will be spent), the federal government will also spend $204.6 billion on interest payments on the national debt, and $72 billion on social assistance programs.

Unfortunately, most people aren't given this context when the headline-grabbing numbers of Olympics spending are thrown around.

While it's good to keep the heat on VANOC, to ensure that they don't dig us into a financial hole, let's not lose our heads over what will in fact be an investment that pays for itself over many years to come.

Comments

[BillMacEwen]

Thanks for showing the other side, but this is hardly proof that the investment will "pay for itself"
Arguably, the project could cost more that 1.7 (http://vancouvercondo.info/2006/09/how-much-will-olympics-cost-bc.html).

And, I don't think it's accurate to compare Olympic spending over six years worth of social spending. Just because the cash is flowing over that time frame.

[kevin]

No one can 'prove' the investment will pay off until a few years after the Olympics, when we can look at whether tourism revenues have grown faster than in the years before the Olympics.

But they are able to do an analysis that can tell us with a good probability how much extra tourism money we will see.

Look at the business plan for the convention centre - I think they were able to calculate that it would take about 8 years to pay for itself.

Even with a margin for error of +/- 10%, they're still careful about planning for these things.

(ie they don't just go, "it would be fun to host the Olympics. Let's get the government to pay for it, whatever it costs").

[Campbell]

At last some realism to the whole Olympic cost argument. For the naysayers to add in the cost of the Sea to Sky improvements and the convention centre expansion is ridiculous. Do they think these improvements will disappear post 2010? As for the folks who think that without the spending on 2010 we would somehow divert the funding to solve the housing crisis in Vancouver is naive in the extreme.

[Chris]

I agree you need to look at everything in context. With any large projects, the numbers are too huge to comprehend.

To put more numbers in context: The cost to fix homelessness in the GVRD: $250 million dollars a year. (http://thetyee.ca/News/2006/12/20/Homelessness/)