The hype is now building for two big sporting events in Canada this summer.
First up, venues across the country will host the FIFA Women's World Cup this month. Then later this summer, Toronto will host the Pan American/Parapan American Games, with events at various sites across southern Ontario. All too often, nations – and more specifically cities – have an economic letdown in the months after hosting international sporting events. But don't expect Toronto to suffer from the post-games blues.
Canada has built a very positive international reputation for organizing and running big international sporting events. The financial debacle of the 1976 Montreal Summer Olympics taught us a bitter lesson about what not to do – city residents paying a "water tax" for decades afterward is not pleasant.
Fortunately, other international games in Canada have learned from the experience and have developed considerable expertise at this activity. Canada has hosted numerous successful international sporting events over the past 40 years, including two winter Olympics, the Pan Am and Commonwealth Games (twice each), and various world championships in hockey, soccer, basketball and athletics.
We understand that to run a successful international sports event, the organizers and local political leaders need to develop a comprehensive plan; set a firm budget for facilities, infrastructure and the event itself; engage skilled management professionals; and execute against the plan. Our elected officials have also learned how to use such events to make necessary and often long-overdue investments in public infrastructure, notably for transportation and sports facilities.
Toronto will avoid a post-Games let-down for three key reasons.
First, and arguably most important, public investment has been relatively modest compared with other recent large-scale events – notably the extravagant 2014 Winter Olympics in Sochi and the poorly managed 2014 FIFA World Cup in Brazil.
Although the total price tag for the Pan-Am Games could reach $2.6-billion, public authorities in Ontario have been very well-organized. Public money has been invested in shiny new public assets, but many existing facilities are being used for Pan-Am events. And the new public assets including an impressive aquatics centre and field house, a new stadium in Hamilton and (at long last) a train from Union Station to Toronto Pearson International Airport – will be available for commercial and community use for decades after the games are over.
Next, the public investment has been spread over a number of years, not bunched up in the months, weeks and even days leading to the event. By planning and completing construction well ahead of time, there is very little risk of a sharp drop-off in public investment spending in the months following the games.
Third, the current economic outlook is positive for Toronto and Ontario well into 2017. The sharp drop in oil prices has chilled the investment climate in Alberta and Newfoundland and Labrador, but lower oil and gasoline prices are good for southern Ontario and for the U.S. market next door. Spending less to fill up the car has freed up about $750 annually for families in Toronto, Ontario and the United States – money that can be saved, used to pay down debt or spent in other ways.
As we detailed at our recent Toronto Business Outlook conference, The Conference Board of Canada expects Toronto to boast the fastest growing metropolitan economy among major Canadian cities for the first time since 1999. We forecast annual growth exceeding 3 per cent in Toronto and across southern Ontario in 2015 and an equally positive outlook in 2016, with employment growth of 1.9 per cent this year and 2.5 per cent next year.
The manufacturing and the transportation and warehousing sectors will continue to benefit from the improving U.S. economy and a weaker Canadian dollar. The construction sector is expected to expand in 2015, up by 3.8 per cent thanks to rising housing starts and a busy non-residential sector. Yet the contribution to growth from the public sector will be modest as the provincial government undertakes actions toward balancing its budget.
The bottom line? Thanks to a combination of effective planning, early completion of facilities and infrastructure and a resurgent economy, Toronto's citizens will be able to focus on winning gold as good and gracious hosts.
Glen Hodgson is senior vice-president and chief economist of the Conference Board of Canada.