Budget Review 2021–22 Index

Rodney Bogaards

On 24 February 2021, the International Olympic Committee (IOC) entered into exclusive negotiations with the Queensland Government to host the 2032 Olympic Games. The Commonwealth Government subsequently committed to fund half the costs of critical infrastructure.

This may include sports-related infrastructure, such as competition venues, Olympic villages, an international broadcast centre and a media and press centre, and non-sports-related infrastructure, such as transport infrastructure that is needed for the Games but is not directly related to staging the Games.

This appears to be a greater funding commitment, in proportional terms, than occurred for the Sydney Games in 2000.

The Commonwealth has also given the IOC guarantees about provision of government services in support of Brisbane’s bid.

Commitments in the 2021–22 Budget

The Budget provides $10 million in 2020–21 to support Queensland’s Games bid (see Federal Financial Relations: Budget Paper No. 3: 2021–22, p. 36) and confirms the Commonwealth’s funding agreement with the Queensland Government by listing it as a new unquantifiable contingent liability for the health portfolio (see Budget Strategy and Outlook: Budget Paper No. 1: 2021–22, p. 254). This means that if Brisbane is selected to host the 2032 Games then the Commonwealth Government will provide its agreed share of infrastructure funding once the timing and magnitude of the funding is known.

The funding agreement specifies a proportion of funding but not a total cap on Commonwealth funding. However, the Commonwealth’s position is that this financial support will be subject to the Commonwealth and Queensland sharing responsibility via an Olympic Infrastructure Agency with shared governance arrangements.  This agency would have full oversight of all projects from the planning, scoping and design phase through to contracting, construction and delivery. According to Mr Ted O’Brien MP, the Prime Minister’s Olympics representative, the joint body would ensure only infrastructure crucial to the delivery of the Games would receive funding.

The timing and magnitude of funding is uncertain

Following the release of the Budget, both the Courier Mail and the Hobart Mercury suggested the Commonwealth Government would spend between $5.8 billion and $6.0 billion on critical infrastructure in Queensland over the next decade if the Brisbane Games go ahead. The basis of these estimates is not stated and the Budget papers do not contain any committed spending. This may be because the Commonwealth has yet to approve actual levels of funding because the timing and magnitude of funding is uncertain and beyond the forward estimates.

If these media reports were to prove accurate, the Commonwealth’s 50% share of the infrastructure funding would result in spending significantly higher than its contribution to the Sydney Games, both in real terms and proportionally. A 2002 NSW government report on the financial contributions to the Sydney Games said the Australian Government contributed $150 million—which equates to approximately $244 million in today’s dollars. This was only 8.2% of the construction costs of the Olympic facilities and infrastructure in Sydney—which had a total cost of $1,839.5 million (approximately $2,988.0 million in today’s dollars) (p. 12). According to Rod McGeoch, who led the Sydney Olympic bid, there was little ‘direct supplementation in infrastructure spend’ for the 2000 Games and the bulk of the infrastructure costs were borne by the NSW Government.

Budgeted costs versus actual costs of the Games

In practice, international experience suggests that the host country budgeted costs for the Olympic Games are usually dwarfed by their final actual costs and cost overruns are prevalent. A detailed examination of Olympic Games costs and cost overruns (using sports-related costs only) has recently been provided in a 2020 paper from Oxford University's Saïd Business School.

The average sports-related costs of hosting the summer Olympics between 1960 and 2016 were nearly US$6.0 billion (with Rio costing over US$13.7 billion and London nearly US$15.0 billion). Non sports-related costs were typically several times that. According to the authors, every summer Olympics since 1960 has run over budget, at an average of 213% in real terms.

The IOC expects the Brisbane Games to be significantly cheaper under its ‘New Norm’ changes, which ask for host cities to use existing infrastructure as much as possible. However, it is unclear whether the IOC’s New Norm changes (to Games governance, hosting requirements and support to organisers) are sufficient to address the numerous drivers of the cost overruns that seem to happen to every country hosting an Olympic Games.