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‘It’s absolutely political,’ prof says, as Mayor Nenshi ties Olympic infrastructure to federal equalization ‘problem’

Mayor Naheed Nenshi’s comments about leveraging Olympic infrastructure dollars as a way to even out federal equalization payments is “absolutely political,” says a University of Calgary economics professor.

Nenshi’s remarks came Wednesday at a break during Wednesday’s Strategic Meeting of Council where fellow councillors discussed the city’s current fiscal situation in relation to the One Calgary program update.

He was asked if the city’s capital budget situation would change if the city were awarded the 2026 Olympics. In short, Nenshi said it would “make things look better.”

“If we’re smart about it and we get the deal that we need to get from the other orders of government, as well as from the IOC on this, that actually frees up some of the pressure on our budget,” Nenshi said.

“Some of the infrastructure that we need to find funding for could be funded through an Olympic envelope.”

Nenshi referred to a post-2010 Vancouver study done for the Canadian Olympic committee that suggested that for every dollar spent by the city, it was returned to the city 12-fold in additional infrastructure money. A 2012 Globe and Mail story outlines the contents of that report.

Then the mayor went on to link it to growing political rhetoric over federal equalization payments.

“So one could think of the Olympics, actually, as a way to manage the transfer payments problem that we have, the equalization payments problem that we have here in Alberta, by actually bringing in investment from the province and from the feds to make up a little bit for the huge amount of surplus taxes we send to those other governments that’s much greater than the amount that’s invested in Alberta and in Calgary,” Nenshi told reporters.

The mayor made the comments as the Yes and No sides of the Olympic debate are firing up their respective campaign machines prior to an expected November plebscite on the question of a city bid for the 2026 Winter Olympics.

University of Calgary Associate professor of economics, Trevor Tombe, who provided an economic impact study to the Calgary Bid Exploration Committee for their May 2017 report, said Mayor Nenshi has used the argument that an Olympic bid could extract extra cash from other levels of government, but said it was “interesting he would link the unpopularity of equalization to try and boost support for the Games.”

“It’s absolutely political,” Tombe told LiveWire, noting that Albertans quite regularly misdirect their frustration with the $22 billion difference between federal collection and expenditure in the province towards equalization.

“I can’t think of a single Alberta politician who actually, publicly, talks about equalization accurately. The mayor is following in a long (and unfortunate) tradition.”

Tombe said the federal GST accounts for as much of the revenue and spending gap as the equalization program does.

“And to say, ‘Olympics will help address the problems with equalization’ makes as much sense as ‘Olympics will help address the problems with the GST.’ It’s completely nonsensical,” Tombe said.

Ultimately, Tombe sees the equalization argument as a weak one for the Olympics because it amounts to “rent seeking.”