Province needs to develop a more comprehensive definition
of Olympic costs so that all Games-related costs can be
Acting Auditor General Arn van Iersel, The 2010 Olympic
and Paralympic Winter Games: A Review of Estimates Related
to the Province's Commitments, p. 8
Premier Campbell's government needs help in defining Olympic
costs, the Acting Auditor General provided Exhibit 8 (pages
40-41 of his report) where he showed $1.5 billion in costs
plus undetermined costs for Provincial Crown Sponsorships,
Games related marketing, Vancouver Convention Centre Expansion
Project, Indemnification of Vancouver and Whistler, and
the Whistler Legacies Society. A footnote points out that
VANOC has budgeted $90 million as expected revenue from
Provincial Crown Corporations, so the items identified with
a question mark for costs are substantial.
14, the Vancouver Province carried a story on the Acting
Auditor General's report even though the paper is on doorsteps
in the wee hours of the morning while the Report was not
released until mid-morning. As a courtesy, auditors provide
organizations with advance copies of reports so as to include
a response from the body being audited. It is a major violation
of protocol to comment publicly on an audit report that
has not been officially released, yet that is what Colin
Hansen, Minister responsible for the games, did when he
described the yet to be released report as "encouraging".
The paper quoted Hansen saying: "Let's put it this
way: I found the auditor-general's comments around the $600
million encouraging". If spending in excess of $1.5
billion when the promise was the cost would not exceed $600
million is "encouraging", then the Campbell government
is out of touch with reality. The hit to the taxpayer is
worse since the federal government and various municipalities
are on the hook for a further $1 billion, bringing the minimum
cost to $2.5 billion, and that doesn't include the Canada
line. Hansen owes the Acting Auditor General an apology
for commenting on his pre-release version of the report,
and he and the Premier owe the public an apology for the
way costs and benefits have been incorrectly estimated.
bad news is that the list of more than $1.5 billion in expenditures
does not include various liabilities from the blank cheque
the province signed for cost overruns. The Acting Auditor
General wrote: "There are a number of legal routes
through which, in our opinion, responsibility for games
costs could be shifted to the Province. The Province has
guaranteed to the IOC that it will cover any financial shortfall
We acknowledge that, legally, the guarantee
is provided only to the IOC. In our opinion, however, the
obligation of the Province to ensure the financial success
of the Games has the potential to cause the guarantee to
be subject to a much broader exposure." In its response,
the province denied that it is subject to broader exposure.
If things go wrong, and it looks like they will, the lawyers
will be very busy.
to understating costs, the province has likely overstated
benefits. The Auditor's report said the estimated $4 billion
in economic benefits flowing from the games depends on "strong
and early marketing efforts" but a provision in the
agreement with the IOC prevents international marketing
from occurring until after the 2008 Beijing Olympic Games,
six years after the start date proposed in the original
study of potential benefits. The Auditor then warned that:
"This raises doubts as to whether those economic benefits
originally forecasted can actually be achieved. The Province
will need to be creative and coordinated with its marketing
efforts if it is to achieve the originally forecasted economic
benefits." He could have included an observation that
the original benefits and revenues were forecast prior to
the U.S. announcing new travel documents, probably a passport.
Those requirements and limited marketing are very bad news
for the province.
Canadian dollar has also increased in value since the bid
was won, but revenues are primarily stated in US dollars.
Since the bid was won, $150 million has been lost due to
currency fluctuations, or in the words of the Auditor: "
as a result of not hedging US dollar revenues for broadcasting
and international sponsorships at the time the Games were
awarded, approximately $150 million less in revenue will
province's $600 million budget originally included a $139
million contingency fund; the unallocated amount of the
contingency is now $76 million. That amount is trivial relative
to the risks and undetermined costs identified by the Auditor.
Grab your wallet because B.C. taxpayers are going to be
paying for the games for decades.