Running from the true cost

PUBLISHED : Saturday, 13 November, 2010, 12:00am
UPDATED : Saturday, 13 November, 2010, 12:00am

Everyone knows the value of a single dollar but it is far harder to get your head around sums with many digits, especially when they reach the billion-dollar level. Governments seem especially bad at this but, then again, they are used to spending other folk's money, and what comes out of other people's pockets never has quite the impact of what comes out of your own.

With this in mind, let's examine the extraordinary business of new government estimates for hosting the 2023 Asian Games. When the bureaucrats first mooted a Hong Kong bid, they solemnly told us that they had been extremely prudent in budgeting HK$13.7 billion to HK$14.5 billion for direct costs. But, this week, they've managed to cut that right down to less than HK$6 billion. As ever, this is not the whole story because there's still a sum of over HK$30 billion for other capital costs. By any standards, this is a vast amount of money.

However, the same people who keep saying that there is not enough in the kitty to provide a decent pension for hard-working elderly people are busy informing us that Hong Kong is rich enough to indulge in this extraordinary vanity project. The Games could, no doubt, be well organised but, at the end of the day, this is a sporting event and let's be frank: Hong Kong is good at many things but sport is not among them and is unlikely to become so.

Considerations of this kind and the prospect of a really huge bill turned even government-friendly legislators against the idea of a Games bid, which explains why the administration is suddenly able to make savings of this order. Nevertheless that still leaves a total bill of around HK$36 billion, which is not most folks' idea of modest.

The very clever people, who can envisage themselves standing on a platform with international sporting stars, have trotted out all the usual arguments for hosting these Games. They are, in summary: a promise that the Games will improve Hong Kong's image; will stimulate sporting endeavour; will create infrastructure to be used for decades to come; and, will be self-financing, therefore creating no real burden.

Promises about things like image are so intangible as to not be worth the paper they are printed on. And, as for the idea that building massive stadiums will somehow help little Johnny in Tin Shui Wai develop sporting skills that are beyond him in a tiny playground, well, this is just so much hot air. Indeed, the way the government has managed to trim its budget for this event has been to cut out a refurbishment programme for indoor sports centres, precisely the places most likely to give local sporting enthusiasts a venue.

The big lie here, however, has been the same big lie uttered by practically every government vying to attract international sporting events to their cities. They always airily assert that the 'real' costs will be minimal and that the lasting infrastructure will more than pay for itself. First of all, what happens is that the budget for these events almost always runs way over original estimates. Vancouver, which hosted the last Winter Olympics, started out with a cost projection of around US$600 million and ended up paying many times that amount. In London, where the 2012 Olympics will be held, costs have quadrupled over original estimates and continue to rise. Montreal, which hosted the 1976 Olympics, only finished paying off the debts incurred in 2006.

To obscure these cost overruns and misestimates, nearly all hosts of international Games play tricks when presenting their figures and focus on the direct costs which, generally, are a fraction of the real costs incurred by heavy investments in infrastructure that ostensibly can be used after the Games but rarely are fully utilised. Even if they are, they incur extraordinary maintenance burdens because they are on such a large scale.

The Hong Kong bureaucrats have merrily travelled down this road of deception, focusing on the HK$6 billion cost figure as opposed to the HK$36 billion figure. And, in case there is any doubt about residual use of facilities, can anyone honestly say that, since Hong Kong spent billions on the Olympic equestrian events, there has been the smallest sign that these sports have taken off here?

So we can safely set aside any hope of honest accounting. And we are left with a bunch of bureaucrats who are busy glory-seeking, dazzled by big projects because they can't be bothered with myriad small projects which have a reasonable chance of improving the sporting life of Hong Kong.

Stephen Vines is a Hong Kong-based journalist and entrepreneur