Oct 18, 2009

Fun and Games


I don’t really get the Olympics resistance stuff — the Games are coming and we may as well make the best of them. Admittedly I’ll be in Baja — traffic avoidance knows no bounds in our household. But I still think B.C. cannot be any better off by making the  Olympics more disruptive than they already will be. And, as economists like to say, what is done is done. The costs are largely sunk. What we should do now is maximize the benefits of whatever the Games may offer.

Nonetheless, I do agree we owe it to ourselves and potential bidders on future Games to do a full accounting of the costs and benefits that these Games have entailed. In 2003, CCPA published a preliminary benefit-cost analysis of hosting the Games  that I and others worked on. We concluded that the Games would entail a significant net cost to taxpayers — a net cost that could not be justified by the jobs or infrastructure that would be created. We also noted there could be significant environmental and social costs, despite the commitments and best intentions of Vanoc, in the rush to build the required facilities and meet budgetary constraints.

It wasn’t a startling conclusion, but it did stand in stark contrast to the position the provincial government was taking at that time. Of course, the province didn’t do any benefit-cost analysis then or since. To justify the Games the government relied on an economic impact study that grossly exaggerated the employment benefits that might be generated by the Games and failed even to acknowledge there would be net costs.

Looking back, our 2003 study was far too conservative. We knew there would be cost overruns for security and other requirements, but nowhere near the amount that has actually taken place. We suspected government Ministries, agencies, and crown corporations would divert resources to the Games, as would municipalities in MetroVancouver and elsewhere, but again not to the extent that has occurred. We anticipated the government might force TransLink to proceed with the Canada Line, but didn’t assume those costs (costs well in excess of the government’s own estimate of the line’s travel time and other transportation benefits) would necessarily be incurred, nor did we expect the unbelievably severe neighbourhood and local business impacts the construction entailed.

We thought that the net economic benefits of the jobs due to the Games — the employment of British Columbians who would otherwise be unemployed or underemployed — would be limited. Now it is clear that they in fact were. Through most of the construction period the Olympics just competed for workers, driving up construction costs for everyone building at that time. It was a windfall for some, but a cost for many others.

All in all, our negative outlook in 2003 was far too rosy. I think that is in the nature of these things. We tend to underestimate the costs and exaggerate the benefits of marquee events that many people clamour for.

So, when the snow settles (I was going to say dust but again, I am hoping for the best)– we do need a full accounting of what has taken place. We need to understand the full extent of the resources we have allocated to these Games in relation to whatever benefits they have offered.  The government really should take the lead. There is no shame in making a mistake that many others would do as well — but there is no excuse for not trying to learn and help ourselves and others make better choices down the road.