IT IS an international truism that the amounts budgeted to host major
international sporting events are never sufficient, and the promised spin-offs
always turn out to be hopelessly optimistic. In this way they are rather
like arms deals and their associated industrial offset agreements.
The big difference in SA's case is that the estimated cost of SA hosting
the 2010 World Cup is turning out to be 50% higher than predicted because
the budgeting process was poor, whereas the rand cost of the arms deal
escalated largely due to the currency's volatility against the dollar.
It is possible that underestimating costs was a deliberate ploy by the
government to win over a population still struggling to come to terms
with the implications of the state spending so many billions of rands
on weapons it neither needed nor had the skills to use. But more likely
it was mere incompetence, with a deadly mixture of arrogance and self-doubt.
In the same way as the government could not quite bring itself to believe
its own economic growth forecasts, and therefore grossly underestimated
demand for electricity - despite it being patently clear from Eskom's
projections that generation capacity would no longer be adequate from
last year - so it appears to have assumed that its own ambitious infrastructure
development programme would fail to get off the ground. Otherwise, it
would not have been 'conservative' in its estimation of building cost
inflation, which ended up hitting 20% last year alone, driven at least
in part by capacity constraints caused by a sudden deluge of state infrastructure
spending.
To be fair, if the government failed to predict that Eskom would be unable
to meet the demand for power during the years preceding the World Cup,
the treasury could hardly have been expected to budget for the additional
R200m that will be required to ensure that each stadium has its own diesel
generator. That, however, is in the past: the big question now is whether
the new total expenditure figure of R30bn is any more accurate than the
initial guess.
, 20 March 2008
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