Olympic costs a growing worry for taxpayers

VICTORIA - It's time to get a little nervous about what the Olympics could cost you.
Olympic organizing committee head John Furlong has just warned - again - that costs are rising quickly, and he's going to be looking for more money from government.
Furlong is vague about how big the financial problem is, and what the options are. But there's not enough money in the current Olympic budget to cover rising costs, he says.
Don't panic, but check your wallet. The provincial government is solely responsible for Olympic cost over-runs, both for capital projects and the Games operations. That's a commitment made by the NDP, and maintained by the Liberals. "The B.C. government will guarantee the potential financial shortfall of the Olympic Organizing Committee," says the formal deal signed by Premier Gordon Campbell.
Campbell says everything will be fine. "Everyone is going to have  to work to make sure they do this within budget and I'm comfortable that they  will," he says. "That's why there's a big contingency in place."  But then Montreal mayor Jean Drapeau promised taxpayers that " The Olympics can  no more lose money than a man can have a baby," and those Games lost $1 billion.
That kind of disaster seems highly unlikely.  But it's hard to be sure, because of the secrecy surrounding Olympic spending.  All in, the Games are supposed to cost something like $2.3 billion to stage -  $620 million for construction, $1.5 billion for operating costs and $139 million for a contingency fund.
You're not on the hook for all the costs. The organizing committee expects $1.3  billion - about 45 per cent of the budget - to come from ticket sales and  sponsorships.
But that leaves taxpayers paying about $1 billion, with 80 per cent of that to come  from provincial taxpayers. Plus any deficit or over-run.
The immediate problem is that you have no idea how well things are going, how your money is being spent or what the risks are. The Vancouver Olympic Organizing Committee - VANOC, as it’s called - isn’t accountable to the taxpayers who are paying the bills.
VANOC released its latest financial statements last week, but there's no management commentary to explain the numbers. It's unhelpful to learn $1.2 million has been spent on the figure skating venue without knowing whether it is on budget, or ahead of schedule.
The provincial government has three directors on the 20-person VANOC board, including close Campbell advisor Ken Dobell. Presumably the premier knows what’s going on.
But we don’t, so we have to guess.
Furlong said more money is needed because the Olympic's costs were all stated in 2002 dollars . B.C. construction costs are running up to 50 per cent higher than they were in 2002, Furlong says. (Revenues were also in 2002 dollars.)
Push the numbers forward on the basis of Furlong's statements, and you come up with something like a current worst-case $365-million shortfall. The budget includes a $139-million contingency fund, and Furlong says about $85 million has already been cut from venue costs. So figure $140 million to come from taxpayers, not a terrifying amount.
That's only a wild, uninformed guess, based on the sketchiest information.
And that's the problem. The public is paying the bill, but is being kept in the dark.
Things may improve in the New Year. The government refused calls to have the province's auditor general appointed as the official Games auditor, a bad decision.
But Auditor General Wayne Strelioff still plans an annual look at Olympics financial planning and progress, with the first report due in February or March. It will be a general overview; budget cuts have left the auditor general unable to monitor individual capital projects.
There's no need for panic. But there is a need to recognize that provincial taxpayers are going to pay for any Olympics deficit. They deserve much more information about how things are going.
Footnote: The cost concerns aren't new. Former finance minister Gary Collins was worried about rising costs in 2002. Strelioff gave the Games financial planning good grades in 2003, but warned that the contingency fund wasn't large enough and that there was no margin for error or bad luck. And Furlong first raised concerns about rising costs in April 2004.