Budget Review 2021–22 Index
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
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
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
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.
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.