The NSW Auditor-General, Tony Harris, has thrown some financial cold water on the Sydney Olympics. A report he published yesterday says that net cost to the NSW Government of hosting the 2000 Olympics would be $2.3 billion. Direct costs were estimated at $5.9 billion with direct revenues of $3.6 billion, leaving a net cost to the government of $2.3 billion. That is $700 million higher than the $1.6 billion estimated by the NSW government last year.
The people of NSW must therefore look at the Games in a different light. They must think of it as paying for a $370 ticket each, for a seat outside the stadium.
The audit admits that it is a difficult task to add up all the costs and all the revenue to conclude whether having the Games is a Good Thing or a Bad Thing financially. And like all audits, that does not include the non-economic matters. It may well be that the feel-good factor is so strong that the $370 per head non-stadium ticket is worth every cent. The people of Sydney might be getting such a buzz out of the Games that the net cost of $2.3 billion is of little moment. That is a fair view.
But even holding that view, the audit report reveals an unacceptable element in the Sydney Games bid and the preparations for the staging of the Games — governmental cover-up and governmental fiddling of the figures.
The people of Sydney, NSW and Australia would be entitled to say in November 2000, “”Well, we paid through the nose for the Games, but by heaven it was worth it.” But at least they should have the accurate information to form that conclusion. The audit report shows that NSW Governments (past and present) deceived the people of NSW, trying to get an emotional and an economic win: “”The Games were fantastic and we even made a profit.”
The deceit is now uncovered. The so-called dividend of $30 million to the NSW Government from the Sydney Organising Committee for the Olympic Games is in the words of the auditor “”largely symbolic”. That is a charitable euphemism given that the auditor points out that if the true costs of SOCOG are added up there would be nothing left over to pay any dividend. The dividend is not merely “”symbolic”; it is an illusion presented to the people of NSW to convince them the Games are running at a profit when they are likely to make a loss of $2.3 billion.
The audit report exposes the fundamentally misleading nature of the NSW Government’s financial presentation of the Games budget. The Government’s figures include all the indirect revenues and exclude all the indirect losses. It attempts to embrace all the flow-on revenue from increased economic activity while conveniently ignoring all the hidden and indirect costs.
On revenue side Government included indirect revenue of $602 million, using economic modelling. But it ignored costs like salaries of permanent officers, like the police, post-Games redundancy payments, inevitable claims for legal liability which ultimately rests with the NSW Government, and the opportunity costs of the loss of benefits if the money had been spent on other things. So it mingled incompatible concepts.
The issue is not merely that this and the previous NSW Government has been squandering money on the Games. The issue is that the Government tried to paint a rosier picture than reality. It is misrepresentation at least, if not outright mendacity and deceit.
The auditor found that the NSW Government’s Games Budget did not capture the overall expenditure and that NSW taxpayers did not have a full picture from the Games Budget.
The auditor was rightly damning about the lack of accountability and openness in the process. He said, “”One of the issues which has provided a backdrop to this audit is the unnecessary secrecy which has been associated with the preparations for the Sydney 2000 Games. A number of documents central to the understanding of the state’s obligations — such as the host-city contract and the endorsement contract and its amendments — have not bee publicly released. Some of these documents have been exempted from the open information provisions of the Freedom of Information Act. In other countries, such documents have routinely been made available to the public.”
When Governments do something in secret these days it seems fair enough for the public to immediately be suspicious and indeed prima facie presume something is wrong until it is proved otherwise. It seems the Olympics are no exception.
The auditor has exposed a cover-up. The cover-up fortunately is not of the proportion facing other elements of the Olympic movement, but it is an attempt to paint a far rosier financial position than is the case.
Further, in not making the documents public, the Government has covered up the true nature of the liability and obligations of NSW taxpayers. Essentially, the former Government, in its enthusiasm to get the Games (and whatever votes and kudos came with them, signed a blank cheque on both liability and obligation. The Government has to underwrite the Games and has to pay up after the event for any outstanding legal liability. The present Government, of course, maintained the secrecy.
As the auditor said, “”The Government could itself have decided that the public is entitled to see what it is doing in its dealings for the Games.”
The auditor points out that while costs can be fairly accurately projected, revenue is a different matter. He highlighted the optimism of the figures in the Games Budget. He said 38.3 per cent, or $960 million of the revenue is yet to be secured from sponsorship, television rights and ticket sales. Sponsorship of $236 million is yet to be secured. In the current climate of people turning their noses up and the whole Olympic business, it may be that this will be harder to secure than the Government imagines.
To be fair to the Government, there will be legacy assets such as the athletic and aquatic centres, but once again no allowance for offsets against future underuse of existing assets was made.
If the smell of the international Olympic scene is not to drift to Sydney in the next 20 months, much more openness is needed.