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Is hosting the 2018 Commonwealth Games really worth it?

On the eve of the Commonwealth Games it is timely to discuss whether this event is really worth the investment of taxpayer dollars and the inconvenience for the Queensland Business Community.

With competition happening across the State (4-15 April 2018), GC2018 is set to inject potentially billions of dollars into the Queensland economy.  There will be 6,600 athletes and team officials, 15,000 volunteers and more than 670,000 visitors, plus a television audience greater than 1.5 billion worldwide.  

When the State Government in 2011 successfully bided for GC2018 it was envisaged the Games would cost $1.075 billion to run, with a further $917 million to be spent on capital investments including the Games Village ($640 million) and sporting facilities.  At the same time the Games were forecasted to generate up to $2 billion in economic benefits, creating up to 30,000 jobs.  The theory was that the Games would provide the State with not only an opportunity to showcase Queensland as a great tourism destination, but would also drive investment and opportunities for local businesses.

However the only real update to these numbers was when Peter Beattie took the helm as Chair and off the cuff estimated the Games would in fact generate between $3 billion to $4 billion in economic benefit.  He went on to confirm that the cost would be in the area of $2 billion (partly offset by approximately $500 million in ticket sales).  He believed that the Games would generate between $1.5 billion to $2 billion in net economic benefit citing it as ‘gut instinct’.  This effectively doubled the gross economic benefit without any real evidence to back up the claim and one journalist immediately retorted with ‘that’s one hell of a gut!’

Part of the problem is that the cost is largely known where as the benefit is very difficult to quantify.  Back in 2011 it was hoped that the Commonwealth Games would bring with it both direct or indirect opportunities through increased tourism, construction, business services, as well as improved hospitality and customer service.

If we get it right the link between hosting a Commonwealth Games and the potential for hosting future international events is strong and will provide a positive boost for the Queensland business community and tourism for decades.

In addition the State Government has had a fantastic opportunity to provide stimulation to many businesses through its procurement program. The stimulus from the GC2018 procurement program is substantial and has been across three distinct areas including the construction of venues; services prior to the games including training, recruitment and information technology; and services during the coming two weeks including catering and equipment.

The State Government openly resolved to ensure that the $2 billion procurement spend flowed to Queensland businesses so the potential 30,000 jobs would be filled by Queenslanders.  Yes there were obvious misses in terms of the overseas organising of the Opening Ceremony, athlete mattresses sourced from abroad and lack of Queensland wines.  However, the State Government can also highlight for example:

  • As at June 2017, of the $657 million in construction contracts for the venues and Games Village, around 90 per cent of the value was awarded to South East Queensland businesses ($277 million to Gold Coast and $313 million to other South East Queensland businesses);
  • 1,500 jobs were created in the construction of the Games Village;
  • 390 jobs were created in the construction of the Gold Coast Sport and Leisure Centre completed in April 2017 at a cost of $105.3 million;
  • 130 jobs were created in the construction Coomera Indoor Sports Centre completed in August 2016 at a cost of $40.2 million;
  • 190 jobs were created in the construction of the Anna Meares Velodrome Chandler was completed in November 2016 at a cost of $60.1 million; and
  • 1,500 direct employees of GOLDOC.

​Regardless of the outcome in this area, many Queensland small businesses over the past five years and as a legacy of GC2018 have been 'skilled up' in State Government procurement processes that will hopefully enable them to tap into future opportunities.  

The GC2018 was also an opportunity to encourage businesses to take a renewed approach to customer service and focus on what product and service offerings set Queensland apart from the rest of the country, and other nearby nations.  Key programs such as the ‘Be My Guest’ initiative potentially means lasting and exceptional customer service as another of the many legacies that can come from the Games.

Each business, that an athlete their family or friends frequents, is a potential ambassador for Queensland.  It is imperative that Gold Coast businesses offer exceptional customer service and overall visitor experience so that each of these athletes, friends and family return home to sing our praises over how friendly we are and that they too should come here.  Lets hope that businesses equally get it right over the coming weeks. 

A successful GC2018 is an interesting concept.  The mistakes that we may sight in the coming weeks are essentially mistakes made years ago in the planning stages.  However, what I am more interested in is, has the State Government delivered on its promise to the Queensland business community? The rhetoric is the State Government has endeavoured to go the extra mile to assist Queensland business to be part of the GC2018 opportunity.

In summary, there is no question the Games will showcase the iconic Gold Coast and Queensland’s spectacular destinations to a global audience that will have a return on investment for many years in the area of tourism. But there are questions that must be asked after the Games and answered not with ‘gut instincts’ but with evidence. There needs to be some accountability and transparency and the final numbers should be reported by the State Government as a matter of priority. What should be answered are:

Did the lion’s share of the procurement flow to Queensland businesses? Are businesses better positioned to access future procurement opportunities? Has customer service really and sustainably improved? What was the cost? What was the economic benefit? How many jobs were created?  In short .......  was it worth it and did the reality match the hype for business?

My 'gut instinct' tells me that the 2018 Commonwealth Games will leave a lasting and positive legacy for many Queensland businesses that will inevitably deliver a 'net economic benefit' to Queensland.  In the mean time spare a thought for those businesses on the Gold Coast who are reporting a slump associated with the dislocation of hosting a major sporting event of this scale and magnitude.  For these businesses the bigger picture is actually a current hindrance without immediate financial recompense. 

Key Facts

  • $2 billion in procurement spend.
  • Potential $2 billion and $4 billion in economic benefit
  • More than 1.1 million visitors are expected in the lead up to, during and post the Games spending more than $870 million in Queensland.
  • Within this it is forecast that the Games themselves will attract approximately 672,000 visitors, spending $323 million (356,000 day trippers, spending $35 million; 265,000 domestic overnight visitors, spending $225 million 50,000 overseas visitors (including more than 6000 athletes and officials), spending $63 million).
  • Apart from those visitors attending the Games, the event is predicted to attract an additional 490 000 visitors, spending $550 million over the period of nine years (four years pre and post Games) as an induced effect (100 000 visitors from overseas, spending $143 million and 390 000 domestic visitors, spending $407 million.)

Source: https://www.embracing2018.com/sites/default/files/resource/ahead-of-the-games-report-nov-2017.pdf

 

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