
Issue No 64		28 July 2000

LaborNET	Ask Neale	Tool of the Week

Economics

And the Winner Is .... Sydney?

Austrade chief economist Tim Harcourt looks at the export impact of the Sydney Olympics and asks if we'll win gold.

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"AND THE WINNER IS ....SYDNEY" were the words spoken by International Olympic Committee President Juan Antonio Samaranch when Sydney successfully won its bid to host the Olympic Games in the year 2000. It is less than a year before we let the games begin on 15 September, 2000. There is great anticipation (as well as much construction activity) in Sydney as we close in on the first significant world event of the new millennium.

But what will the Olympics do for Australia apart from providing one big party in Sydney for two weeks? Well, it has already provided a significant boost to construction activity, particularly in New South Wales and has been part of an improved level of confidence in the Australian economy. It is also likely to bring technology and knowledge to Australia that will remain with us after the big event is over. According to a study by Arthur Anderson and the Centre for Regional Economic Analysis (CREA) the Olympics will contribute an additional $6.5 billion to Australia's GDP for the twelve year period 1994-95 to 2005-06 (Arthur Anderson/CREA,1999, p2). In short, Australia has a lot to look forward to in 2000 and beyond in addition to some fine athletic performances at the Games themselves.

The economic benefits of the 2000 Olympics can be classified as direct and indirect. Direct benefits include the impact of the Olympics on exports, investment and employment.

In terms of exports, the main impact will be inbound tourism, sponsorship fees, media broadcast rights, and ticket sales.

The staging of the Olympics will encourage more international tourists to visit Australia. According to the Tourism Forecasting Council 1.5 million additional international tourists are expected to visit Australia over 1994-95 to 2005-06 because of the staging of the Olympics. This is estimated to generate an additional $ 2.7 billion in tourism exports (see Arthur Anderson/CREA,1999, p 2).

Sponsorship fees received from international sources will be strong leading up to the Olympics and according to the Reserve Bank of Australia, broadcast rights (approximately

$ 1 billion in value) will be recorded as exports in September quarter 2000. Ticket sales sold to overseas visitors (of up to $100 million in value) will also be recorded in the September quarter. The RBA estimates that the overall boost to export receipts will be equivalent to around 1 % of GDP in the September quarter of 2000. (See RBA, 1999, p27). Similarly, the Arthur Anderson/CREA study (p2) estimates a positive impact on the balance of trade from the Olympics of $0.8 billion in 2000 and $ 0.2 billion in the post- games period of 2001-02 to 2005-06.

In terms of investment infrastructure projects have greatly boosted domestic economic activity, particularly in New South Wales. The total value of Sydney's construction project is $ 3.3 billion of which $1.1 billion is funded by the private sector ( Olympic Co-ordination Authority (OCA), June 1999, p5.) According to the RBA this construction activity has already assisted the economy by contributing a little over half of one percent of annual Australian GDP over the five years beginning in 1995/96The largest stimulus to growth probably occurred in 1996/97 (RBA, 1999, p26).

The infrastructure spending not only includes spending on Olympic facilities such as Stadium Australia but also to upgrades to Sydney airport, roads and railway related investment. These improvements will benefit both local resident and overseas and interstate visitors to Sydney well after the Olympics as well as during the event.

The Olympics has provided an important boost to employment. The OCA estimates that more than 35,000 people have worked on OCA construction sites since the first project at Homebush Bay was started. It is estimated that since the OCA was formed in 1995, over 12.5 million hours have been worked on Olympic related projects. There will also be multiplier effects. According to the OCA, every job created on a construction site will create two more off site for suppliers, material producers and transport workers. (OCA,1999, p5.)

The Olympics are expected to boost NSW employment by 5,300 in an average year of the 12 years representing the Olympic period. In addition 2,200 jobs are expected to be created outside NSW over the same period (Arthur Anderson/CREA, 1999, p3).

It is also important to highlight the indirect benefits that the Olympics will bring. Certain export sectors will enjoy more profile and opportunity. The obvious one is tourism with an associated boost to the transport and hospitality industries. For instance, in aviation, the staging of the Olympics will bring significant benefits for Ansett and Qantas in terms of increased traffic, earnings growth and brand awareness (see Morrison, 1999). The Olympics will also opportunity for sports exporters . According to Australia Sport International (ASI), Australia exported $363 million worth of sporting goods in 1998 and is expected to increase its exports to Asia, North America and Europe with the help of the staging of the Sydney Olympics (see ASI, 1999).

Indirect benefits will also come from increased exposure to Australia as host of the millennium Olympic Games. Austrade is driving the Government's Australia Open for Business campaign which takes advantage of the heightened global interest in Australia at the time of the Olympics. A global promotion for Australia as a prime business destination is supported by a number of new business programs which capture new interest to turn it into export and investment revenue. The key program under Australia Open for Business is Business Club Australia. Also, managed by Austrade, Business Club Australia connects Australian exporters with overseas buyers and investors through a global networking club which also shares the excitement of the 2000 Games (see www.australiaforbusiness.com).

As well as the networking opportunities provided at the Olympics, Australia will benefit from the transfer of technology and knowledge as host of the Olympics. As a world class and internationally visible event, the Olympic Games have attracted innovation as countries try to better each other in terms of technology and technique. The Olympics is not just a competition of the athletes of nations but is as much a battle of the scientists, architects, engineers and artists of those nations as well. It is a 'knowledge Olympics' as well as an athletic Olympics. For example the Homebush Bay site and associated venues are examples of design excellence produced by Australian architects. Australia will benefit as many of these great ideas of the new millennium will be put into practice on our own soil in 2000. There will be a vast array of talented people in Sydney in 2000, which Australia can learn from. This will assist us greatly as Australia competes globally in the information age where knowledge and innovation are at a premium.

The hosting of the Sydney Olympics has already brought significant benefits to Australia in terms of environmental technology. For example Olympic Village has been designed to be a net contributor to local power generation in western Sydney. Similarly, the water retilication system has been developed to ensure an ecologically sustainable and economically efficient outcome from the Olympics. The environmental impact of the games are an important indirect benefit to Australia's stock of 'green' capital which will be crucial to future economic performance.

Of course, a note of caution should always be included. Some economists have warned the Australian public not to exaggerate the benefits of the Olympics because of past experience (See Dabkowski and Ketchell,1999 Gittins, 1999 and Mules, 1999). However, many poor results in the past occurred because of poor financing, unexpected geo-political events and a prior record of uneven economic development. The OCA and SOCOG are well structured so that the financing of the Sydney Olympics is shared between the private and public sector. Australia is an open economy currently experiencing good economic performance despite adverse international conditions. It is a stable, pluralist, multicultural country with a highly educated and skilled population. Accordingly, Sydney is well placed to avoid some of the pitfalls that affected host nations of the past.

In summary, the preparations for the Sydney Olympics in 2000 have already provided significant economic benefit for Australia in terms of export promotion, investment, economic growth and jobs. There will be big boost to Australia's trade performance, tourism and the economy overall in 2000 because of the event itself. Importantly, the benefits will continue well into the new millennium as Australia gets more international exposure for its exports and gains from the transfer of technology and knowledge from the world's best. Opportunity beckons for the athletes, for exporters, for artists, for scientists and for the whole Australian community.

Austrade's Australia Open for Business web site details how Australia is staging the 2000 Games, and specific business initiatives - http://www.australiaforbusiness.com.

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Issue 64 contents

Interview: Greg Sword Unsheathed
The NUW national secretary is set to be endorsed as ALP Federal president next week. He talks about the relationship between the two wings of the labour movement.

Unions: Phone Rage, Headaches and Stress
A comprehensive survey of the call centre industry conducted by the ASU has revealed an industry workplace culture dominated by excessive monitoring and stress.

Economics: And the Winner Is .... Sydney?
Austrade chief economist Tim Harcourt looks at the export impact of the Sydney Olympics and asks if we'll win gold.

International: Western Sahara: Referendum Or War?
A June UN referendum in Western Sahara could have provided the people of Western Sahara a chance to exercise their right to self-determination and independence. It didn't.

History: The Union's Roots in Song
We look at some of the songs that kept working people going through their darkest hours.

Media: Unchaining the ABC
The ALP needs to rethink our public institutions to determine how they might better deliver the ends for which they were originally established.

Environment: Motorways Fail the Pollie Test
Our daily grind of congested roads, polluted air, and frustrated motorists is putting all and sundry to the test, and not least Liberal and Labor politicians.

Satire: Murdoch Launches Bid for Under-9s Netball Team
Sydney's lucrative junior league netball broadcasting market has been shaken by a bid by one of the world's most predatory entrepreneurs, Rupert Murdoch, to secure ownership of the most successful team in the league.

Review: Espionage a Trois
The Whitlams' brass section his teamed with some of the hippest cats in Sydney to make the sort of music you'll want to shoot baddies to.

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