Lies, damned lies and the Olympics

This CP article (published in the Globe and Mail) poo-poos the growing concern that Vancouver’s Olympic Games are coming in at great expense. Specifically, the article questions what projects should be included in the total price tag.

The article should come with a warning, however: content written by the wife of former Finance Minister to the Campbell government back when Vancouver was awarded the Games. Perhaps that explains a text that seems to dismiss the work of the BC Auditor General while promoting the government’s spin du jour.

Defining the Olympic cost

Canadian Press

VANCOUVER — Should the cost to straighten and widen a mountain highway whose tight turns kill motorists every year be considered an Olympic expense because the upgrade is getting done in time to help visitors get to the 2010 Games get to Whistler efficiently?

Should a transit stop for athletes to the Games be considered an Olympic expense, even though the stop will be needed when the athlete’s village converts to regular housing after 2010?

British Columbia’s auditor general and its minister responsible for the Games disagree. So do accounting experts.

“I think the government has done it strictly by the book in the sense that under normal accounting rules, you would account for assets and liabilities and costs in terms of who legally incurs them,” said Richard Rees, CEO of the Institute of Chartered Accountants of B.C.

But, says Alan Mak, with a litigation and forensic accounting firm, “if I’m a taxpayer in British Columbia looking at how much I’m going to have to absorb, it’s total dollars. There’s no ifs, ands or buts about it.

“Whether you call it Olympic or infrastructure or transportation or health, I’m paying for it. So I want to know what the costs are.”

British Columbia’s auditor general, Arn van Iersel, issued an audit Thursday of the costs of the Olympics to B.C. taxpayers. He concluded the Games will cost Canadians $2.5 billion, with $1.5 billion of that being picked up by British Columbians.

That includes $775 million for an upgrade to the Sea to Sky highway between Vancouver and Whistler, and $8 million for the transit stop.

He also included a $41 million cost for expenses for the B.C. Olympic Secretariat, an entity established within the Ministry of Economic Development for, according to the website, “overseeing British Columbia’s Olympic financial commitments and ensuring British Columbia’s Olympic vision is achieved.”

The provincial government’s estimate of Olympics costs includes none of those.

Ah yes, but when the sell job for the Olympics was on, back before we won the bid, EVERYTHING was included: the transit line (which was pushed to the front of the queue for regional projects and threatens to undermine the finances of the whole system), the Whistler highway upgrade (which is a gift to well-heeled property owners in and en route to Whistler), and the new convention centre (which was deemed essential by the business community).

Including every project that rode on the back of the Olympics allowed a high priced consultant to generate the fantastic numbers of 244,000 jobs (person years, it was later admitted) and $10.7 billion in additional GDP (total GDP increase, over a twenty-year period, if one read the fine print, though few did).

Casting this after the fact as “well, there are differences of opinion as to what should be included” is highly disingenuous on the part of the reporter.

Instead, Colin Hansen, the minister responsible for the Olympic file, insisted the auditor’s report shows the province is on track to meet its $600 million budget.

“We obviously disagree,” said Hansen.

Hansen should explain why everything was in when the Games were being marketed to the public, but now the government is taking an extremely narrow view that does not even include the expenses for VANOC, the organizing committee for the Games.

So does the accounting community.

One of the fundamental principles of accounting is that it should be complete, said Rees. Without a complete statement, the picture could be misleading.

But the Sea to Sky highway has been accounted for, he noted. It appears in the current budget documents in the capital plan for the Ministry of Transportation.

“You can’t count things twice,” he said.

“If that work is being done and paid for by the Ministry of Transportation, then that’s where the transactions are taking place, those are the guys writing the cheques, that’s whose books the transaction should be recorded in.”

Rees said it would be “nonsensical” to account for one transit stop in the Olympics budget, while the rest of the new rapid transit Canada Line is being accounted for in Transport’s budget.

However, Rees said he doesn’t disagree with van Iersel’s attempt to provide a complete picture, even if some of the expenses are being booked in other ministries.

I think Rees is being slippery here. The issue is what is the total cost to taxpayers for the Games and associated projects, not how the beans should be counted in the financial books. van Iersel, whose previous position was comptroller general, is not an idiot.

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