Hosting Olympics is a bad way to grow the economy
If your goal is to give a real boost to the economy, which of these options would you choose: increase taxes, run up a deficit, transfer money between governments or put your economic eggs in a month long basket?
Probably none of the above.
Yet, this is how Calgary 2026 hopes to kick start the economy sometime in the next eight years. They have estimated the Olympics will spur $7 billion in economic fortune. Fortunately, economists have been quick to decry these estimates as being absolutely overstated.
Here are four reasons why hosting the Olympics is a bad way to grow the economy.
First, taxes will increase. Taxpayers are expected to foot a $3-billion tab. With history suggesting these costs will continue to rise, Calgarians better brace for the next wave of tax hikes to foot a growing bill.
Many families and businesses have already seen ever-growing costs from higher property taxes, income taxes, business taxes and a new carbon tax. Abruzzo Ristorante, Studio Revolution Fitness and the Riley & McCormick western wear store cited greater tax burdens as a contributing factor behind decisions to close their doors. Things have become so bad on the property tax front that Calgary city council has rebated tens of millions of dollars over the last two years to help businesses stay afloat.
A heavier tax burden is the last thing Calgarians need.
Second, there is no money for this. Calgarians have been warned by city council that they already face tax hikes or service cuts. After years of running large deficits, the average Calgarian now owes nearly $30,000 in provincial and federal debt.
Government debt will need to be paid eventually and uncertainty over future tax hikes will do little to encourage businesses and investors to make Calgary their new home.
It’s not financially smart for a family to go further into debt to throw a party, especially when there are other priorities they can’t afford. Why then, is this a smart financial move for governments?
Third, relying on federal transfers is not a path to development.
Calgary 2026 hopes the federal government will dish out $1.5 billion. This may be the least Albertan economic strategy imaginable. Rather than focusing on internal policies that promote growth — reduce red tape, lower taxes — the Olympic bid is a plea for government transfers.
Sure, equalization is a mess and federal transfers are imbalanced, but the solution is to get them fixed, not to try and right systemic wrongs by hosting the Olympics every 40 years. Instead of relying on government transfers, why not push the federal government to take fewer dollars in the first place?
Finally, the real challenges impacting investment are being swept under the rug.
The plan suggests the Olympics will help attract investment by putting Calgary on the radar. Are we missing out on investments because the international community doesn’t know Calgary exists, or is it because investors know our problems all too well?
The Olympics won’t solve core investment issues such as tax competitiveness, the ever-growing cost to do business, the nightmarish regulatory system, the inability to get large projects built and uncertainty around future tax hikes. In fact, the games could make some matters worse.
It’s time to stop promoting the Olympics as a way to grow the economy.
This column was published in the Calgary Sun on October 10, 2018.