Sky News Live, PM Agenda with David Speers

Interview

PFI008/2017

02 May 2017

Topics: Western Sydney Airport

David Speers: The other spending commitment, although we don’t know how much, is going to be the commitment today to build the Badgerys Creek Airport in Western Sydney. Sydney Airports Corporation, which operates Kingsford Smith, has decided and confirmed today, telling the stock exchange, they will not be building the airport in Western Sydney. They had the first right of refusal and they’ve looked at this every which way and decided, no this doesn’t stack up for them. The Government then had the option to either find another private player to step in and build the airport or do it themselves. And they’ve announced today they’ll take option number two, they’ll do it themselves.

With me now is the minister responsible for this, Paul Fletcher. Thank you very much for your time this afternoon. So, Sydney Airport’s CEO said today the risks associated with the development and operation of Western Sydney Airport are considerable and endure for many decades without commensurate returns for our investors. If this is too risky for the private sector, why should taxpayers be funding it?

Paul Fletcher: Well, good to be with you David and, look, a very significant milestone today on the road towards the delivery of Western Sydney Airport, and we’re committed to having it operational by 2026. And what Sydney Airport Corporation has said today is that this is an opportunity which doesn’t meet their particular investment criteria. Now, of course, governments can take a longer-term perspective than private sector investors and governments also have a broader set of considerations, including the economic growth and opportunities that a major piece of infrastructure like Western Sydney Airport will generate. Some 9000 jobs by the early 2030s, and it’s also likely to attract many businesses to locate nearby, that’s the pattern with airports around the world, and of course those businesses will bring additional jobs.

So, Western Sydney Airport is very important for Western Sydney and for Sydney and for the nation, very important for jobs and economic growth in Western Sydney, very important to provide additional aviation capacity. The joint study into the aviation needs of Sydney which reported in 2012 found that Kingsford Smith Airport would run out of available slots by 2027 and would have no additional capacity from the mid- to late-2030s, even through so-called upguaging, replacing smaller aircraft in a slot with larger aircraft. So, very important from an aviation capacity point of view, to give Sydney the growth capacity that it needs, and indeed the nation because Sydney is the international gateway. 40 per cent of international traffic comes into Sydney. And also very important for getting better access to air travel for the 2 million people in Western Sydney who will be closer to Western Sydney Airport than to Kingsford Smith Airport.

David Speers: Alright, well I want to come back to a few of the things you’ve said there, but just to get back to whether this is a worthwhile investment for taxpayers. Infrastructure Australia certainly has named Badgerys Creek Airport as one of its high-priority projects, but as you would know, the credit ratings agency Standard and Poor’s did warn earlier this year it would not make an adequate financial return for a decade. Now, when you said in your answer there that you’re willing to- or the Government’s willing to wear a longer investment return timeframe than the private sector, I mean, what are we talking about here; decades before this will make any money?

Paul Fletcher: Well, the Treasurer Scott Morrison will have more to say about the finances of this in the budget next week, as is appropriate, but the general principle that I’m articulating is that this is certainly a project which makes sense, that’s why Infrastructure Australia has it included on the Infrastructure Priority List. Of course, the business case has been assessed by Infrastructure Australia and governments are able to take a longer timeframe. In due course, you would expect that this asset would return to private sector ownership. Of course, the other major airports around Australia are privately owned following a process in the nineties and the 2000s to transfer them into private ownership and, indeed, it was that process in relation to Kingsford Smith Airport which led to the creation of the right of first refusal.

David Speers: Well, just on that, are we going to have this transition, it could well happen before the airport’s due to open in 2026, right? I mean, presumably you’re going to want to have either a private owner or lease it to a private operator, you’re not going to have public servants running the airport, are you?

Paul Fletcher: Well, the commitment we’ve made today is that the Turnbull Government will build Western Sydney Airport. As we get closer to the operating date, the date when it will commence operations in 2026, obviously then the question of who will operate will come into focus. Now, under the Airports Act, for example, there are clear processes under which you can delegate operation of an airport to an operating company. So, those are all options to be considered. The key commitment, though, we’ve made today is to build the airport. That’s very important so we can have it operational by 2026, and indeed we’ve also made a commitment that initial earth moving works will commence by the end of 2018. So, there’s a lot of work to do and the Government now has control of this project, that’s important, because this is an ambitious timetable.

David Speers: But just, sorry to clear this up, but during this process, construction gets underway next year, it’s meant to be done by 2026, you’re going to be talking to the- well, the government of the day is going to be talking to the private sector about someone coming in during that period. It’s basically on the market that whole time, is this how it works?

Paul Fletcher: No, what I’m saying is that that is an option that is open to us. The priority at the moment is to build the airport, that is clearly going to be the focus for a number of years. There’s a number of things that also have to happen, including all the flight path planning, all of that detailed work, but just the sheer scale of the earthmoving task here is very, very substantial. So, there’s a lot of work over the next few years, there’s plenty of time to work out the specific details in relation to who will operate. There are a number of models available and, indeed, if you look around the world there’s a whole range of different models available. So, there’s plenty of time to decide on the course of action there but what we have clearly decided and committed today is that the Turnbull Government will be building Western Sydney Airport and more details, including the financial details, will be announced by the Treasurer in the budget.

David Speers: Now, as you mentioned just then, the flight paths, they’re still to be worked out? And can you just confirm once again for us after today’s announcement, this will be a 24-hour operation at Western Sydney Airport?

Paul Fletcher: Yes, that’s right. This airport has always been planned not to have a curfew, although of course the Turnbull Government has made the commitment that during evening hours aircraft will land from and take off to the south west – the much more lightly populated areas – where safe to do so, which is expected to be the great majority of the time. Now, those areas are very lightly populated for a number of reasons, including, of course, for more than 30 years that land has been owned by the Commonwealth and there have been planning restrictions around the airport. But yes, it is important that the airport can be as productive as possible, and that’s a key reason why there will not be a curfew.

David Speers: And you did say earlier one of the reasons this is needed is because of the restrictions, or the capacity constraints, that will come up at Kingsford Smith from 2026-27. What about lifting the curfew there? That would ease the capacity constraints, wouldn’t it?

Paul Fletcher: Well it’s clear that there is a need for more aviation capacity in Sydney. That was the finding of the joint study into the aviation needs of Sydney in 2012.

David Speers: [Interrupts] And you’d get it right away if you lift the curfew at Kingsford Smith.

Paul Fletcher: And the Government has made clear what our policy direction is to provide that additional capacity. Our policy direction is to build Western Sydney Airport. We announced that in 2014; it’s a decision that governments had failed to take for many, many years. The Coalition Government has taken that decision.

David Speers: Okay, but why do we need to spend 5 billion or 6 billion on a new airport, instead of lifting the curfew at Sydney Airport?

Paul Fletcher: Look, Western Sydney Airport is important for a range of reasons. First of all, providing additional aviation capacity; second of all, providing better access to air transport to people in Western Sydney. One of the examples one of the chief executives of the airlines gave me is passengers of his who will take a $69 discount fare from Sydney to Melbourne, but they’re paying $200 in cab fare from Western Sydney to the airport. So better access to air services for the people of Western Sydney. It’s a city that, if it were standalone- Western Sydney, if it were a standalone city, would be the fourth largest city, the third biggest economy in Australia. Much smaller cities like Gold Coast, Adelaide, Canberra, all have their own airport, so Western Sydney certainly deserves its own airport. And most importantly, the economic boost expected to generate 9000 jobs by the early 2030s, and airports are significant attractors of businesses. And of course, part of the broader planning process underway between the Commonwealth and the New South Wales governments under the Western Sydney City Deal, the airport’s an absolute centrepiece of that. We’re also working with the surrounding councils. So there are many important reasons to build Western Sydney Airport.

David Speers: Okay. Now, one of the reasons as I understand Sydney Airport were reluctant to do it themselves was the lack of any firm commitment on rail infrastructure from federal or state government. What happens with that now? Are you willing to move ahead, now that you’re going to be building it, with some train links to and from the airport?

Paul Fletcher: Well, in relation to ground transport connectivity, the first thing to say is that under the $3.6 billion Western Sydney Infrastructure Plan we’re building excellent ground transport connectivity. The M12 Motorway will run from the airport to the M7 and connect to the Sydney Motorway Network.

David Speers: I’m just asking about rail links.

Paul Fletcher: Sure, but it’s all part of an overall picture of ground transport connectivity. The Northern Road to be upgraded to four lanes all the way along the western side of the airport. So very significant commitments there. In terms of rail, there’s a scoping study underway. The two governments, New South Wales and Commonwealth, have a joint scoping study looking at what the right rail link would be to the airport, when should it be built, how much will it cost, how should it be funded. So that scoping study will report to the two governments by the middle of this year, and we’ll then have more to say after that. So detailed planning work underway. The Prime Minister, in his speech last year, issued the challenge to the team preparing the study. He wants to know if rail can be ready by the time the airport opens, or, if not then, how soon afterwards.

David Speers: Alright. Finally, Paul Fletcher, can I ask you in your capacity as a local member for Bradfield, are you willing to see schools in your seat lose government funding?

Paul Fletcher: Well look, I think it’s a very important announcement that’s been made today by the Prime Minister and by the Education Minister, Senator Birmingham. I think they’ve laid out a clear plan; I congratulate them for doing that.

David Speers: Are you willing to see any schools in your electorate lose government funding?

Paul Fletcher: Well look, I congratulate my colleagues on the plan that’s been laid out. Obviously there are schools all around the country that will be assessing the implications. I have no doubt that schools in my electorate will be in touch with me if there are issues they want to discuss, and it’s my role as a local member to be available to discuss those with them.

David Speers: Yes, but are you willing to say to them you should lose money?

Paul Fletcher: I will of course be available to have discussions with schools in my electorate, and every local member around the country will be saying the same thing.

David Speers: No, but that’s not my question. I appreciate you’re willing to talk to them, we would expect you to do that, but are you willing to say to them you should lose some money?

Paul Fletcher: Let me make it clear. The plan that the Prime Minister and Senator Birmingham have announced has been carefully developed and it has my full support.

David Speers: And it also involves 24 schools – the Minister says – on the eastern part of the country losing money, and a further 350 not getting as much as they otherwise would’ve. So I think this is an important question for any member of the Government: are you willing to say to schools in your electorate you should lose some money?

Paul Fletcher: David, the plan has my full support. I’m aware of the implications you’re talking about. I think the Prime Minister and the Education Minister have done an excellent job with this plan. This is a very important set of issues for Australia.

David Speers: Alright, but it would just sound like there’s a reluctance there to say that schools in my backyard should lose money, and then you are in one of the areas that presumably would have some schools on this list.

Paul Fletcher: Bradfield has excellent schools. I haven’t had a chance to look at the detailed list, so obviously I’m not going to be making any specific comment about schools other than to say there are many excellent schools in Bradfield, and I regularly meet with the principals.

David Speers: Okay, and I’m sure you do, but you’re not willing to say that any of them should lose money?

Paul Fletcher: David, can I make it absolutely clear, can I repeat again: this plan has my full support.

David Speers: Alright. Minister Paul Fletcher, we thank you for your time. Thank you very much.

Paul Fletcher: Thank you.