The Auditor-General of New South Wales found the eventual cost of Sydney 2000 was over twice the budget costs estimated by the bid committee.

When Sydney bid for the 2000 Games, the bid committee estimated a total cost of $AUS 3.0 billion (£1.0 billion), of which just $AUS 363.5m (£125m) would be borne by the public. By 1998, however, when the Auditor-General of New South Wales was called in to review the Games's budget, it became clear that this figure was a huge understatement. He estimated that the true cost of the Games was more like $AUS 5.9 billion (£2.1 billion), of which the public would be paying $AUS 2.3 billion (£800m)^[1]

The reason for the huge discrepancy was that the bid budget was based on "only those direct costs which have an additional cash effect on the budgets of relevant agencies." In other words, the budget had excluded many capital costs for facilities and infrastructure, as well as, for instance, most of the costs of providing security, which naturally fell on the public purse. The original budget had also excluded costs which might crystallise after the Games, for instance in the form of redundancy payments, as well as the costs of disruption to public services. The original Sydney bid budget did, however, include in its calculations all potential revenues, including $AUS 600m of putative increases in tax income to the Government.

In the words of the Auditor-General of New South Wales: "Limiting the costs to direct costs but allowing revenues to reflect indirect revenues mingles incompatible concepts." This sort of financial shenanigins is why it is important that the plans and budget for a potential London bid are made public in advance of any decision by the Government whether or not to bid.

He also made a point of condemning the excessive secrecy which surrounded the Sydney bid budget and the subsequent operations of the Games Organising Committee. "One of the issues which has provided a backdrop to this audit is the unnecessary secrecy which has been associated with the preparations for the Sydney 2000 Games.”

In 2002 the Auditor-General of New South Wales undertook a further audit, confirming that the Sydney Games had ended up costing $AUS 6.6 billion (£2.3 billion), and had cost the public purse somewhere between $AUS 1.7 and 2.4 billion (between £580m and £830m), depending on your estimate of incremental tax revenues^[2]

A shortfall as modest as Sydney’s  for a London Olympic Games would add a one-off charge of £187 to each London household's council tax.

The cost of a London Olympics would, however, be far higher than those of Sydney. Firstly because of the enormously under-invested state of London's sporting facilities and transport infrastructure, and secondly because of the massively increased cost of security since September 11^th. Perhaps Athens would be a better guide?