June 16, 2010

Gaming the Budget

Full cost of Olympic security even higher than we thought

by Tim Groves

The Dominion - http://www.dominionpaper.ca

TORONTO—The amount the Canadian military spent on its portion of securing the 2010 Vancouver Olympics was more than double the publicly stated cost of $212 million, indicate files obtained by The Dominion.

Initially, the Department of National Defence (DND) only publicly stated the much lower "incremental costs" of its Olympics operation, know as Operation Podium. Incremental costs do not include the salaries and other expenses the military says they would have spent anyways. When taking the “full costs” into account—including salaries for members of the Canadian Armed Forces—the number jumps much higher.

“The number we're going with is $212 million, that's the incremental cost,” said Lieutenant-Colonel John Blakeley. “The incremental costs are the additional costs.” He did not disclose the full cost of Operation Podium during the interview, but according to data on governmental websites, the full costs for Operation Podium reached nearly $470 million.

If the entirety of DND expenses are taken into account, the overall security budget for the Winter Games breaches the $1 billion mark, well above the government's 2002 budget of $175 million. “Incremental costs are basically the costs excluding salaries,” said Steven Staples, a military analyst and president of the Rideau Institute. He explained it is usual for the military to use the incremental cost instead of the full cost when publicly stating budget figures.

“This is an old argument back and forth—should you be using full costs? Should you be using incremental costs? We often use full costs here [at the Rideau Institute] because you can't do missions without people, but the military is trying to diminish the apparent cost. They go with incremental and they say 'well, we would have [to pay] these troops anyway,'” said Staples. “In our work we tend to use both.”

A chart published on the website of the Vice Chief of Defence Staff in March 2010 listed cost estimates for the Canadian Forces operation to secure the Olympics Games. Full DND cost was listed as $471 million in the 2009/10 fiscal year. The chart also listed the publicly stated Incremental DND cost which came to $216 million in the 2009/10 fiscal year.

Blakeley said that if the Canadian Forces were paying soldiers regardless of where they were deployed, their salaries should not be included in the cost of operations.

“I think you do need to look at the full cost,” counters Staples. “Wouldn't it be great if we could buy cars from General Motors and not pay for the labour that was involved in building [them] and only pay for the steel and rubber and plastic? But we don't. We have to pay for the whole cost.”

“Generally if you want to do more military missions, you need to recruit more troops and pay for them. That is a cost associated with doing those missions, and should be included,” said Staples. “Similarly if you weren't doing many missions I don't think you would have these troops hanging around, in fact you would let them go back into the economy just like any major company does.”

The budget for Olympic security released in February 2009 totaled $900 million. This figure only budgeted $212 million for the Department of National Defence. There was no indication that this was only the incremental cost. By including DND full costs the total reaches $1.15 billion.

It has become increasingly difficult for Canadians to keep track of the ever-changing budgets, even four months after the Games.

“I guess I believed that $900 [million] was the full number, but it changed so often I have a hard time being surprised that it's more, which is horrible because we should be outraged and shocked that it went so far over budget and that we can't believe these numbers,” said Myka Tucker-Abramson, a Vancouver resident who opposed the Games.

This revelation comes as questions arise over the cost of securing the three-day G8 and G20 summits in Huntsville and Toronto. The government originally released a $179 million security budget for the two meetings. Known as Operation Cadence, the Canadian Forces operation to secure the summits has an estimated budget of $72 million in incremental costs, as published on the website of the Vice Chief of Defence Staff. In late May the government released a new security figure of $933 million. When the full cost of Operation Cadence is taken into account, as opposed to the incremental costs, this figure is pushed to over a billion dollars.

Following public outcry and pressure from opposition parties over this massive increase, Auditor General Sheila Fraser says she will investigate the G8/G20 budget. No such investigation is being held for the cost of Olympic security.

“It seemed like the budget was limitless, that any Olympic project, be it security or infrastructure, could use as much as it wanted,” remarked Tucker-Abramson. “Given the recent cuts to public education, health centres on the Downtown East Side [of Vancouver] and all the cuts that women's centres and other vital social services have faced due to unavailable funds, the money budgeted for security was shameful.”

Tim Groves is an investigative researcher and journalist based in Toronto.

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