HECS for PECS?

Jason Murphy has an argument over at News.com that we hear from time to time:

WHEN Australia’s Olympic team entered the stadium in Rio in Saturday’s Opening Ceremony, it was a moment of intense national pride. But for me that pride is mixed in with thinking about all the money we spent getting them there.

Australia spends a huge amount on elite Olympic sports. The Australian Sports Commission gets $250 million from the government to spend each year — over $100 million goes to elite athletes. State Institutes of Sport also spend up big.

The Australian Olympic team — smiling bundles of muscle in very smart jackets — is a project we have worked on for years. The athletes — and all the ones they beat to get there — represent billions of dollars of investment. Another way to look at it? That’s a lot of hospital elective surgery waiting lists walking round the track out there.

I know that feeling – when some swimmer got silver the other day I remarked to Mrs D and number 2 son that we’d just witnessed several million dollars going down the toilet. Apparently that’s not the appropriate attitude; one should happy that an Australian did so well, but disappointed she didn’t win gold. I was thinking of the foregone tax cuts.

So here is one argument why the government should finance sports:

I love sport, and I really love watching Australians win. … Australians love watching Australians winning Olympic medals.

One of my RMIT colleagues – a sports economist – points to this positive externality suggesting that the joy that Australian sporting victories gives ordinary Australians is something that should be paid for, and it is paid for, by the government on our behalf. Needless to say I am underwhelmed by this argument and have told him so. For those of us who loathe track and field event sports the Olympics could very easily be a negative externality. In any event the presence of an externality is a necessary but not sufficient condition for government intervention. There is no reason to believe that the joy of watching Australians win medals can’t be captured and sold on the open through things such as – oh, I don’t know – “ticket sales” and “advertising”. No reason at all for government funding too.

But that isn’t the story we normally hear – we then hear a story about how sports people should pay HECS.

We make police, nurses and teachers pay back their education and training. Why not athletes?

HECS kicks in at $54,869 and you repay til your debt is gone. An equivalent scheme for elite sports would probably have to work differently (especially since some athletes have HECS debts too.)

It might be best, for example, to take 1 per cent of after tax earnings per year spent at the Australian Institute of Sport, when they earn more than $100,000 a year. That could go up to a maximum of 10 per cent if they spent 10 years at the academy.

Successful athletes would not have their payments limited. In this sense it would not be exactly like HECS. They would effectively pay back their own costs, plus a share for all their teammates that turned out not to be so lucky (or talented).

I have mixed feelings about this. First thing is that HECS is a fixed fee. Students pay back the (partial) cost of the education they received. There is no reason why the Institute of Sport couldn’t or shouldn’t work the same way.

Taking a percentage of sports star earnings over some threshold is something that Australia already does – it’s called progressive income tax. Taxing the successful to subsidise the unsuccessful is something we already do too – it’s called the welfare state.

So I can see an argument for HECS for PECS – but I would leave it as HECS and not some tax levy or additional tax on sportspeople. Ideally, of course, the Institute of Sport would be shut down in total, or privatised, and taxes cut.

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41 Responses to HECS for PECS?

  1. Amused

    During this Olympics, I’ve seen many people complain that our lack of medal winning athletes has been caused by government under-funding of the Australian Institute of Sport. These individuals want even more millions thrown at our Olympic athletes.

    Compare this with the USA, who consistently top the medal charts. They don’t even have a sports ministry in their government.

    The United States Olympic Committee receives NO federal funding and is entirely supported by American individuals and corporate sponsors.

    Not a dime of taxpayer’s money, but they’re the best in the world.

  2. v_maet

    Final paragraph summed it up perfectly.

    Ideally the funding and services would be cut but given that is not likely, they should at least be made to repay their government funded training with interest.

    The claims of positive externalities are laughable when people say they are role models to children, considering their careers are over at 26

  3. Artist Formerly Known As Infidel Tiger

    Uday Hussein knew the right way to treat these mooching failures.

    Our swim team should be forced to swim home. Fucking hopeless.

  4. Old School Conservative

    Defunding Australian sport would have to be done simultaneously with defunding all art programs, superfluous federal departments, political campaign costs, halving the senate, eradicating all government media operatives, slashing politician’s salaries, and halving the number of federal public servants.
    What’s not to like?

  5. Fisky

    One of my RMIT colleagues – a sports economist – points to this positive externality suggesting that the joy that Australian sporting victories gives ordinary Australians is something that should be paid for

    What fucking victories would those be? We’re getting worse with every Olympics!

  6. Habib

    The olympics is more boring than an 18 week election campaign. I couldn’t give a shit about any of the sports (more than a few of which are stretching the definition) with the exception of the sevens, which don’t seem to be televised. The results have deteriorated ever since government became involved, much like since rugby turned pro. Amateurs have no other reason to compete than to win. Particularly in its modern form that owes more to Hitler’s showing off than to a group hug, it’s sole benefit is giving me a reason to avoid news broadcasts on any medium, and channel 7 entirely. Any bid to host any of these events should have to go to a plebicite, with full disclosure of costs. And the AIS should get the Rabz ABC treatment. At least with the losers sent to Brazil we won’t have to cough too many 15k cheques.

  7. Old School Conservative

    Slightly off topic, from American Thinker:
    Kim Rhode made history at the Olympics on Friday. She became the first athlete ever to win medals in six consecutive Olympics.
    But it didn’t make many headlines.?She’s pro Second Amendment.

    Her gold was in woman’s skeet shooting.

    Not bad for a non-government funded athlete.

  8. duncanm

    The irony is all that funding does very little, if anything, to help grass-roots sports; other than some media exposure.

    The national bodies are beholden to the gobs of cash they get for olympic / elite funding — and ignore the development of their sport for the majority as a result.

  9. H B Bear

    Positive externalities? What a fucking crock. If you want to feel better about the world do some drugs.

  10. Habib

    Local rugby competition in Brisbane has been throttled by the pro code, same as what occurred when the Broncos kicked off in the NRL. The BRL withered and nearly died, most clubs went tits up. At least in these cases it was the market at play, as opposed to whiny rent-seekers wanting their hobby or past-time subsidised by people who mostly couldn’t give a rats arse about their chosen PT.

  11. duncanm

    externality

    Economist code for made up shit

  12. MD

    As a matter of principle I don’t watch the Olympics at all. What an obscene waste of money. It’s just bread and circuses. Give the fools something to amuse them and you may pick up their vote.

  13. Peewhit

    Habib, a little history. Prior to one of the Olympic games during Malcom Frasers reign, there was no real Commonwealth government support for the Olympic games. You would have to look up how many medals were won, but in one of the 1976 or 1980 Olympics we won a number of medals somewhere near zero. Malcom was humiliated by this, and started the sports academies to improve the situation. It has improved it, if you consider the money well spent.

  14. Oh come on

    And isn’t the whole thing largely based upon the East German model, ie. identify and fund the shit out of the events (like the 20m doggy paddle) and sports (say lawnmowing) that no one gives a fat rat’s about? So after the Berlin Wall came down, we had a couple of decades where our relatively tiny population absolutely smashed the medal tallies thanks to the ruthless, bleeding edge scientific selection and training approaches honed by the AIS, allowing our Olympic heroes to bring home mountains gold in floating, drink-driving, repetitive sneezing and staring competitions. But by 2008 the bastard Poms finally cottoned on to our idea we pinched from the pinko Krauts and spend the entire proceeds of their National Lottery on beating us (screw cancer). Not fair.

  15. Habib

    The Poms don’t pay any bonuses to the leeches should they happen to Bradbury.

  16. Habib

    & Fraser’s “conversion” to socialism was nothing of the sort. He was never anything else, the only bastard who ever had the opportunity to repeal all of Whitlam’s compound idiocies, and he kept the lot, and expanded them.

  17. Marcus

    Another way to look at it? That’s a lot of hospital elective surgery waiting lists walking round the track out there.

    That’s something we’ve been hearing a lot of in WA over the past few years – whenever there’s an article about anything new happening in Perth, in particular Elizabeth Quay or the new stadium, there’s often a flurry of comments or letters along the lines of, “Why don’t we spend that money on schools or hospitals?”

    Of course, plenty of money gets spent on schools and hospitals anyway, but the Olympics, like Elizabeth Quay, is just a highly visible target for those types of complaints. Frankly, if you’re really worried about money being wasted instead of freed up for elective surgeries, there’s probably a good deal more low hanging fruit in the public health system than there is in the Olympic programme.

  18. Mique

    I agree with charging HECS for any sports person who receives any form of government-funded training. I hate what the Olympic Games has become, and would not lose a minute’s sleep if it were to be abandoned forthwith. As for the likes of Kevan Gosper, John Coates et al, I have no vocabulary extensive enough to describe my contempt.

  19. a reader

    There’s a fair bit of ignorance about how sport funding actually works in both the original article and the comments here. I’ll try to give some background.

    1. The Australian Olympic Committee does not get any government funding. The Australian Paralympic Committee gets a small amount of funding but that is because it also operates as the sanctioning body for some sports.
    2. As of 2012, the Australian Institute of Sport effectively doesn’t exist. After the fairly abysmal effort in London, the entire process was changed. Previously certain athletes would get a scholarship to the AIS. The AIS now exists as a facility that high performance programmes are able to use in their training and preparation as well as employing a small number of physiotherapists, nutritionists, researchers etc.
    3. The Australian Sports Commission inaugurated ‘Winning Edge’ which basically only puts money into things that have proven in recent history that they can win Olympic/Paralympic/Commonwealth/World Championship gold.
    4. Under Winning Edge, funds are allocated directly to the high performance programme of the sport, the responsibility of which lies with the individual National Sporting Organisation. What this means is that there is no ‘AIS scholarship’ any longer as it has been proven time and again that a centralised elite squad never performed like a chosen athlete/coach relationship. The AIS swimmers used to be walloped by Queenslanders for instance.

    The 2014-15 amount granted by the Australian Sports Commission was $132.6 million which sounds a lot until you realise that cutting that wouldn’t make a skerrick of difference to the budget bottom line. Of that, 18.5 million is allocated directly to participation grants to the sport-not high performance programmes. A further 13.6 million is allocated directly to disabled sports.

    I think you can look at that funding and divide it into three area:
    1. Cultural programmes. In this regard I fail to see how high performance sport funding is any worse than arts funding…except that athletes tend to produce performances you can be proud of whilst artists produce such wonders as the Skywhale.
    2. Disability funding. In this regard I think this is actually better for disabled people than boondoggles like the NDIS. Fit people, even with disabilities, generally require less medical care and in a society with universal healthcare that has to be a good thing.
    3. Community health programmes. Unlike other government health programmes that try to boss you around, sports programmes encourage you to participate and this leads to a whole of society health benefit and less strain on the health budget.

    If you want to look at it purely as a complete extremist economist, yes it is a waste of money. But if you accept that governments have a role to play in cultural affairs you accept that in a sports loving country you can justify it.

    If you want to shut down the usual suspects who say sports funding should be on a HELP basis, it’s easy to point out that sport was 130 million and arts was over 230 million, not including the ABC in 2014-15.

  20. BorisG

    So I can see an argument for HECS for PECS – but I would leave it as HECS and not some tax levy or additional tax on sportspeople.

    The difference is that the majority of the supported sportspeople will never reach the HECS threshold from the sports related earnings. and hence HECS will be in a huge debt. Hence taxing the most successful more progressively makes sense to me.

    And while we are at it: first remove all the government funding for building stadiums for rich sports like AFL and cricket… Government funding for the rich is even more irrational.

  21. Stackja

    Forbes Carlile achieved much with little.
    Ian Thorpe could repay his funding.

  22. geoffff

    “If you want to feel good about the world do some drugs”.

    Isn’t that what the Chinese team does?

  23. Tom

    Since there is zero correlation between funding and results, let us adopt the US system and, since we’re more sports-mad than them, we’ll still finish in the top 10 medalling countries each Olympics. Memo: CIS, IPA: The correlation between government sports funding and results is an excellent subject for your next thesis.

    In a Big Government country addicted to spending other people’s money, there’s another horrible clanger: we spend five times as much on government media ramming economy-killing, nation-wrecking green left politics down our throats as we do on sports funding. Given a choice, I know what the public would vote for.

  24. A Lurker

    The Olympics is so important to this Aussie that I’ve not watched a moment of it – not even on the news. I couldn’t care if we were first or last in the medal tally.

    Surely there are far more useful things to throw all those hundreds of millions of $$$$ at?

  25. Tom

    There no correlation between government sports spending and Olympic results, but there IS a secret weapon: freedom.

  26. Diogenes

    2. Disability funding. In this regard I think this is actually better for disabled people than boondoggles like the NDIS. Fit people, even with disabilities, generally require less medical care and in a society with universal healthcare that has to be a good thing.

    I disagree with you here. You cannot generalise like that .

    When No 2 son was still alive the “paralympic” role models were shoved in his, and his school mates faces all the time by well meaning idiots. At the the time he attended Brisbane’s only “Life Limited” Special School, with kids with all sorts of life limiting medical conditions – most of the students were dead before 20, and none survived past 25.

    I can’t speak for now, but most paralympians (there were a few blind since birth & Downs Syndrome, but they never seemed to get trotted out) at the time , and he died two weeks shy of 16 years ago, were able bodied, and very fit and suffered an accident that gave them the disability.

    When I say shove in their faces it was a “why can’t you do that ?” attitude. Well in his case, if he overexerted himself, the lactic acid levels would rise(he had only 50% of the Pyruvate Dehydrogenase enzyme that helps keeps lactic acid levels in check) , travel up the spinal column, and yet another bit of his brain would burn out, and it was a a 4-6 week stay in hospital as his health was got back under control, and we learnt to cope with whatever new wrinkle had been sent our way

  27. duncanm

    a reader wrote:

    Of that, 18.5 million is allocated directly to participation grants to the sport-not high performance programmes.

    I’m sorry – in practice that’s complete bull.

    I participate in Sailing – 70+% of Australian Sailing funding is government taxpayer largesse (through the ASC, as you point out), and is explicitly firewalled from general expenditure on the masses.

    This was not done to stop spending ASC money on the people, but because the general participant’s money (we also pay membership fees) was being spent on the elite.

  28. rebel with cause

    At least they should get rid of the AIS. It sits unused in Canberra with a full compliment of staff with nothing to do.

    One of the reasons the Americans win so often is because their athletes compete so regularly. The college system forces them to. They come into the Olympics battle hardened and ready, while ours come in from six months at Rancho Relxo having their egos massaged.

  29. Michel lasouris

    Making these utterly non productive sportswimps pay for their indulgences is a small start. However what is really needed is a revolt by the employees and the shareholders of the Companies who are persuaded by their overpaid and under skilled marketing “gurus’ to spend money to which neither the Companies nor the marketing ‘experts are entitled, to stop thieving.
    Sport should abandon it’s mercenary tendencies and return to amateur status.

  30. Boambee John

    Professional, commercial, organisations such as AFL, NRL, ARU, Tennis Australia, should have to build and pay maintenance for their facilities.

    Then we might see more focus on the sport and less on PC claptrap like the Rainbow Round in AFL.

  31. Bill

    In America there would be +10,000 people on sports scholarships at colleges. In effect, I’d presume most of that is paid for by governments, but some by wealthy alumni donors. The total funding in US college sports would dwarf the AIS budget.

  32. Kool Aid Kid

    Sinclair: if taxpayer money is going down the toilet in the pursuit of gold medals at the olympics then how would you describe the expense required to sustain the employment of a “sports economist”?!!!!!

  33. Sinclair Davidson

    Surprisingly the private sector pays a lot of money for sports economists.

  34. H B Bear

    Professional, commercial, organisations such as AFL, NRL, ARU, Tennis Australia, should have to build and pay maintenance for their facilities.

    Yep – not news to the taxpayers of WA in the hole for $1bn+ for a new AFL stadium that will deliver around 40-50k people every weekend to Packer’s casino precinct for half the year. Total capex contribution by Crown $0.00.

    His old man said you only get one Alan Bond in your life, that’s not quite true.

  35. Dozer

    There’re worth ever cent, I mean who in their right mind would hop a plane to Rio to see if they could out-float a turd ?

  36. Kool Aid Kid

    Sinc: that is indeed odd. But the private sector also pays heaps to sponsor olympics. Does not explain why taxpayers should give a crust to someone called a “sports economist”!

  37. Mother Lode

    People have to decide: If they believe money is the key to Olympic glory, then each medal is really auction and they will take pride in winning an auction. Or, it is about natural (and national) ability -in which case money makes no difference.

    Or, what is the real case: natural talent and money combine to give the eventual results: a grade 2 athlete with grade 1 funding can compete with a grade 1 athlete with grade 2 funding. But this combination (talent and dollars) can’t be disentangled, so people pretend it is all talent.

    And, of course, there is the superficial derived metric that Australia should always do better. The fact we were more healthy and athletic 50 years ago must be glossed over, so pump in the dollars.

  38. Sinclair Davidson

    Does not explain why taxpayers should give a crust to someone called a “sports economist”!

    Universities get money from a variety of sources. Economics departments mostly from private sources. As you suggest sports is a big business and the private sectors pays heaps for it. Think Moneyball.

  39. Ragu

    Local rugby competition in Brisbane has been throttled by the pro code,

    If you’re talking Union, then they have buggered themselves. The season has wound up months ago and it’s not even September yet. So if you like watching blokes bash into each other all you are left with is the league competition.

    I hear most clubs in QLD are financially rooted, not hard to see why when your front bar is only open for 16 weeks and they’ve moved the season so far forward they are competing with the cricketers for money.

  40. Habib

    Brisbane premier final was last Sunday, brothers beat Uni. It’s only gone back a few weeks to allow for the national club comp, a necessary addition to get a half-decent national side now the club comp’s starved of funds, no-one goes any more. We need the national provincial comp the same way Un Zud and the Jaapies need the Currie Cup and Ranfurly Shield.

  41. Ragu

    I was last in Brisvegas mid July and GPS (not my club per Se, but they are down the road) had their final game of the season. UQ put on a homecoming event in March for the business/economics Grads and after the premier grade walked off the field so did the entire crowd. Then the bar closed. Absolutely no effort was visible to keep the members there putting money in the registers.

    A couple of players mingled in the clubhouse while their girls organised that nights hedonism in town. Then everyone split before a rowdy song could break out before presentations.

    There was a time when stumps at the rugby club was called at two in the morning and the club captain had to walk out to the field and yell at the couples still shagging on the field to piss off.

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