Tuesday, 4 September 2012

Addressing Gerry Brownlee's points

I appeared on Close Up last night discussing the economic merits of stadium construction. I am grateful for the opportunity to contribute to the story and to share what I believe to be important points that taxpayers need to be aware of when it comes to building sports facilities.

The Earthquake Minister (and Deputy Prime Minister), Gerry Brownlee, was interviewed after the piece. The interviewer, Mark Sainsbury, put several questions to the Minister, and I feel it proper to reply in kind to Mr Sainsbury's questions and Mr Brownlee's responses.

Firstly, I am not anti-stadiums. I never said the facility would be a white elephant nor a complete waste of money. I certainly did not say that Christchurch shouldn't build it. It is true, I am yet to be convinced that stadiums in isolation present a compelling case for government funding. I believe that a greater proportion of the costs of facilities should be funded by the private sector. After all, if there are economic gains to be had from facilities, surely those who receive those gains would be prepared to pay to ensure that at least some proportion of those gains will continue (if the government said "sorry, no more funding for stadiums")? I am not presenting an argument against stadiums, rather, I am simply pointing out what is known about the actual economic impacts of stadiums on host economies.

If I was as dismal as Mr Brownlee implied, I would have pointed to some scholarly empirical research that has shown that facilities may, in fact, have detrimental impacts on local economies.I didn't, however, as my own research hasn't found any clear evidence of detrimental impacts.

Mr Brownlee pointed out that Christchurch has "nothing... we've lost the lot". Christchurch does actually have a new $30m 'temporary' facility, funded by central government. That, to me, isn't nothing. Ask people in quake affected suburbs of Christchurch whether $30m from central government would have been useful elsewhere (for restoration of basic infrastructure, for instance) and you'd probably find most people would plump for elsewhere rather than on a stadium.

I agree. you certainly could make a similar argument for art galleries, museums, performing arts centres, theatres, libraries... the list goes on. The point is that after a disaster of this magnitude, with limited public funds (that come with opportunity costs attached), the sensible approach economically is to fund things in order of priority. If a stadium was high on the list of priorities, then fine, build a stadium! Just be aware of what a stadium investment entails.

And a 35-40 year lifespan and the upside that has "got to be pretty big"? In the US, even some brand spanking new stadiums haven't been associated with a "pretty big" upside - some have in fact been demolished after only 20-25 years.

I have no doubts that Gerry Brownlee is trying his best to do the best thing for Christchurch as Earthquake Minister and as a local MP. Everyone wants to see Christchurch recover, both quickly and effectively, from what has been crippling to this wonderful city. I appreciate that bold decisions need to be made, and they are not always likely to satisfy everyone. I wish Gerry and the Christchurch City Council well in their endeavours to deliver a new Christchurch. I'll certainly be keeping an eye on things as they progress.


  1. "I agree. you certainly could make a similar argument for art galleries, museums, performing arts centres, theatres, libraries... the list goes on."

    Another point here is that many of these things are expected to lose money and we build them anyway. The thing about stadiums is that we are told they will make money, and they don't. You don't see "business plans" for libraries but you do see them for stadiums and stadiums don't live up to the hype.