The Australian Security Intelligence Organisation assessed the risk as medium, based on a low level of threat but very high level of harm if it actually happened.

That level was the same as for other potential threats such as bombings or violent protests.

Cabinet documents for 1998 and 1999 - released by the National Archives of Australia - show government officers involved in the Games' preparations were concerned that virtually no planning was being undertaken in NSW to counter the terrorism risk.

"This was primarily due to lack of expertise and knowledge of both the phenomenon and the appropriate counter-measures," according to a minute marked Secret Austeo, considered by the national security committee of cabinet on June 1, 1998.

The minute noted there was no information that anyone was actually plotting such an attack.

"Nevertheless the likelihood of a NBC (nuclear, biological or chemical) attack could change quickly depending on the international situation in the period leading up to the Games," it said.

The prospect of anyone importing or manufacturing an atomic bomb without detection was regarded as remote.

But materials were available in Australia to manufacture chemical, biological or radiological weapons which would be most effective in confined spaces and against large groups of people.

Targets could include major venues and transport nodes such as railway stations and also particular participants such as US or Israeli teams, their accommodation and training venues.

However, the most likely threat against the Games was assessed as being a hoax, which would need to be treated as a genuine threat until proven otherwise.

Significantly Defence was at that time looking to enhance its own NBC defensive capabilities, particular for possible operations in the Middle East.

A decision was made to fast-track Defence plans, noting other events such as the Centenary of Federation and CHOGM were coming up.

The federal government had another emerging Games problem - the money.

In February 1999, cabinet decided that "any further request from the NSW government or the Sydney Organising Committee for the Olympic Games (SOCOG) for financial assistance for the staging of the Games be strongly resisted."

The Commonwealth later backed off a little, deciding at a cabinet meeting in October 1999 that future requests from SOCOG for assistance "be assessed within existing policy parameters and at no net additional cost to the budget".

By the end of 1999, direct Commonwealth support of the games exceeded $500 million, not counting numerous other costs such as defence, federal police and customs.

Australian Associated Press