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The Numbers are in: Olympics will Cost Taxpayers a Pretty Penny

September 14, 2018
The Numbers are in: Olympics will Cost Taxpayers a Pretty Penny

This week, Calgary’s official Olympic bidding organization, “BidCo,” released their hosting plans for the 2026 winter games. The plan outlines how much the Olympics is expected to cost, infrastructure plans, expected revenues, and the total bill that must be covered by taxpayers.

Let’s take a closer look at BidCo’s hosting plan and the potential bill (a little foreshadowing: taxpayers are expected to fork up a pretty penny).

The Costs

BidCo estimates the Olympics will cost $5.2 billion, up over half a billion dollars from projections released last year. This begs the question, if we have already seen costs increase by half a billion dollars, what will the costs amount to by 2026?

Moshe Lander, a sports economist at Montreal's Concordia University, predicts the real cost of the 2026 Olympics Games will reach nearly $8 billion.

Historically, the Olympics has been no stranger to cost overruns. Since the 1960s, 19 Olympics have been over budget, averaging 156 per cent overruns during these games.

What We’re Paying For

We can expect a large tab, but what is our money being spent on?

Perhaps most important is what we’re not getting for the $5.2 billion. Not found within BidCo’s plan are funds for infrastructure projects such as the often-discussed LRT link to the airport.

The City has projected $5.7 billion worth of infrastructure needs that are going unfunded, and many key infrastructure priorities are not included in BidCo’s plan. If we had tax dollars available (more on this shortly), there are likely better ways to spend the money.

The plan does include a host of other items including a new mid-sized arena that could hold up to 6,000 attendees, facilities to accommodate athletes, media, sponsors and “dignitaries,” along with improvements for facilities in Canmore, Nikiska and Whistler. Money well spent?

BidCo’s plan also include some corporate welfare as both McMahon and the Saddledome are set to receive upgrades. While a new NHL-calibre arena are not in the plans (yet), the professional sports teams are sure to benefit from this use of taxpayers’ money.  

Curiously, the security budget for the 2026 Calgary games is pegged at $600 million – compared to nearly $1 billion in security costs for the 2010 Vancouver games. While we should be pleased to see cost savings and acknowledge that situations are different, one is left skeptical of the security costs that are pegged hundreds of millions of dollars less than the event that took place a decade and a half earlier.

Who’s Paying?

With $2.2 billion expected to come from Olympic revenues, taxpayers are left with the remaining $3 billion tab (a 25% increase from last year’s expected bill). This raises a few important issues.

First, our governments don’t have money to spend on the Olympics. Both the Alberta and federal governments have strung together successive deficits and are accumulating significant debt. Calgarians owe nearly $30,000 each in federal and provincial debt.

Federal debt is currently going up $2 million every single hour.

Provincial debt is currently going up over $1 million every single hour.

There’s no money to pay for the Olympics.

Second, higher taxes are the last thing Calgarians, Albertans and Canadians need. For the sake of brevity, let’s only consider the recent tax increases facing Calgarians. Calgarians are paying higher property taxes (will the City of Calgary decide to earmark more money to offset business property tax increases?), higher corporate income taxes, higher personal income taxes, along with a new carbon tax.

Finally, it’s important to address the claim that without the Olympics, Calgarians will not receive those tax dollars from the provincial and federal governments.

If Calgary does have an infrastructure or housing crisis (this could be partially solved by reducing government intervention not increasing it), then government spending shouldn’t be conditioned on hosting a sporting event.

Furthermore, the federal and provincial governments take tax dollars from Calgarians. One way of “putting” dollars back into Calgary’s economy is simply by taxing less. This should be a serious consideration given recent tax increases and competitiveness concerns.

Here’s our last point on this issue. Why should someone in Peace River or Halifax be forced to pay taxes to subsidize Calgary’s sporting bonanza? How can someone justify a single mom from Toronto paying taxes to support the Olympics in Alberta?

The Economic Benefits?

We often hear that hosting the games would provide an economic boon for Calgary. This notion has been pushed forward by BidCo, estimating that Calgary and Alberta could see over $7 billion in economic benefits.

To be fair, greater spending from tourists, locals, and Canadians coming to enjoy the festivities will benefit our economy. Some people who are looking for a job may find employment. Some businesses are sure to benefit from government upgrades and contracts.

But if one were to imply that the Olympics will provide real long-term economic development, they would be misguided at best, and spreading false hope at worse. This type of philosophy requires a belief in top-down economic management and neglects the market’s (a.k.a. individuals with skin in the game) ability to allocate resources, capital, and labour better than central planners.

Taking resources out of an economy, sprinkling some to stakeholders, then putting it back into the economy for a project that would not pass the market test, and will be partially consumed in a matter of weeks does not promote true growth.

Fortunately, some economists have been quick to decry the $7 billion economic benefit estimate as being absolutely overstated.

Serious doubt should come to mind whenever a one-time government-funded party is argued for in order to promote the economy.

Final Thoughts

The numbers are in. Taxpayers are expected to foot a $3 billion bill. Unfortunately, history suggests taxpayers should expect greater costs.

The Olympics may be a great event (full disclosure, I truly enjoyed Vancouver 2010). But we don’t have the money to pay for it, and if we did, that money should be spent on other pressing priorities.

The numbers are indeed in. There are now even more reasons to vote NO at November 13’s plebiscite.

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