The taxpayer-funded construction of venues and infrastructure did fuel a growth spurt in Sydney. Estimates by economist Terry Rawnsley show the city’s economy grew at a super-strong rate close to 5 per cent in the two years before the games. But a nasty hangover followed. Sydney’s annual growth rate fell sharply after 2000 and remained subdued for some years, although many factor contributed to the slowdown.
But investments on the scale of those made to host the Olympics have effects that play out over many decades. With 20 years of hindsight it’s apparent hosting the games has delivered some important long-term economic benefits.
The Sydney Olympics were staged in the middle of a historic phase of globalisation which took off around 1990 and lasted until the global financial crisis in 2009. A striking feature of that period was the emergence of highly connected, internationally-oriented cities which thrived amid the rapid growth in trade. Those “global cities” have become the command posts of the international economy.
For a middle power city like Sydney, hosting the games in 2000 was ideal. It helped frame Sydney as a big-league city at a moment of rapid global integration.
The games were a well-timed global advertisement for Sydney’s capabilities. The way the event was staged – with efficiency, safety and gusto – was positive for investor confidence in Sydney (and Australia) and helpful to our export industries.
The games took place just as lucrative new tourism markets were opening up in emerging Asian economies, especially China. The event was also staged on the cusp of a boom in international education, a sector which has grown rapidly in Sydney during the past two decades.
“Having all those images shown on TV globally of such a successful event, in a city that’s nice to be in, served us well and certainly helped our exporters,” says AMP’s chief economist, Shane Oliver. “It showcased Australia’s talent.”
Perhaps even more valuable is the way the Olympics transformed the geographical heart of Greater Sydney.
It’s easy to forget much of what we now call Sydney Olympic Park was a toxic waste dump prior to the games. Contaminants at Homebush Bay, as it was known, included petroleum waste, unexploded ordnance, chemical waste, power station ash, gasworks waste, asbestos, industrial hydrocarbons demolition rubble and domestic garbage.
The Olympics provided the justification of a much-needed clean-up. Between 1992 and 2000 the NSW government spent more than $130 million to remediate pollution spread across 400 hectares.
Without the games, it’s difficult to imagine a government committing the resources for such a comprehensive renewal.
“If the Olympics hadn’t come along Sydney might still have a giant waste dump taking up hundreds of hectares of prime land in the heart of the city,” says Terry Rawnsley who is an expert in regional economics.
“That’s the counterfactual universe in which Beijing got the nod for the 2000 Olympics and Sydney never hosted the games.”
The Homebush Bay clean-up greatly improved the amenity of western Sydney and the economic dividends flowing from that makeover are substantial.
Olympics-related remediation work paved the way for the transformation of adjacent suburbs, especially Rhodes, and the creation of the new ones at Wentworth Point and Newington. The extensive green spaces established at Sydney Olympic Park also facilitated high-density residential development in the vicinity, adding to Sydney’s supply of well-located housing.
The post-games planning of the Olympic precinct has come in for some justifiable criticism, especially its empty feel and lack of vibrant urban spaces.
Even so, Sydney Olympic Park has emerged as an important commercial hub.
The output of the Homebush Bay-Silverwater statistical area (which is made up largely of Sydney Olympic Park) reached $5.54 billion in 2018-19, according to Geospatial Economic Modelling by the consultancy PWC. That makes it the eighth largest local economy in NSW and bigger than some long-established commercial hubs including Chatswood-Artarmon and Mascot.
Last year, Sydney Olympic Park Authority had more than 4000 residents and its venues, businesses and institutions hosted almost 20,000 workers and 2000 students. Around 10 million people now visit the area for business or leisure each year, more than double the number that attended the 2000 Olympic and Paralympic Games.
The economic output of the suburb will grow considerably once it is connected to both the CBD and Parramatta by the West Metro rail project due for completion around 2030.
The economic legacy of Sydney’s Olympics is still taking shape.
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Matt Wade is a senior economics writer at The Sydney Morning Herald.