Doorstop Press Conference, Badgery's Creek

Interview

PFI010/2017

02 May 2017

Topics: Construction of Western Sydney Airport

Paul Fletcher: Today the Turnbull Government has announced that it will be building Western Sydney Airport. This is a very important milestone in what’s been a journey since the Coalition Government committed, in 2014, to build Western Sydney Airport at Badgerys Creek. Since that time we have gone through a regulatory approval process, issued a draft environmental impact statement and a final environmental impact statement. We issued an airport plan at the end of last year, which creates the regulatory approval under the Commonwealth Airports Act, to build an airport here at Badgerys Creek. And we issued what’s called the Notice of Intention to Sydney Airport Corporation, which sets out the terms under which, if they chose, they could have built Western Sydney Airport. We were required to do that under their right of first refusal, which they have had since Kingswood Smith Airport, which was privatised in 2010.

Following Sydney Airport Corporation having considered those terms, they today announced that they would not be accepting the notice of intention and that now clears the way for the Turnbull Government to make the announcement we have made today that we will proceed to build Western Sydney Airport at Badgerys Creek. Treasurer Scott Morrison will have more to say about the details of that in next week’s budget. But this is a very important milestone in the Turnbull Government’s careful, thorough work towards delivering Western Sydney Airport, towards Western Sydney Airport being operational by 2026.

Western Sydney Airport is enormously important for Sydney, for Western Sydney and for the nation. It’s important to provide extra aviation capacity. The joint study into the aviation needs of Sydney in 2012 said that Kingswood Smith Airport would run out of slots by 2027 and would run out of any significant additional capacity by the mid to late 2030s. This airport will provide improved access to air services for some two million people who will be closer to Western Sydney Airport than to Kingswood Smith.

Most importantly, Western Sydney Airport is about jobs, economic growth, and economic opportunity for Western Sydney. The airport is expected to generate around 9000 jobs by the early 2030s and, around the world, airports attract lots of businesses, which get value in being located near to an airport and the connectivity it offers, and those businesses will bring many more jobs. Of course, there’s also the jobs during the construction phase and so this is about jobs for Western Sydney. An area where today, of the million people in the workforce in Western Sydney around a third have to leave Western Sydney every day for work. So this is about jobs in Western Sydney for people from Western Sydney and it’s about Western Sydney Airport as an economic hub, which will attract other businesses, other activity and create jobs and economic opportunity for Western Sydney.

So the Turnbull Government committed to delivering Western Sydney Airport and we have a clear plan. Today’s announcement from Sydney Airport Group was not unexpected at all. We’ve been doing detailed contingency planning over many months and we have immediately announced that the Turnbull Government will build Western Sydney Airport. Our commitment has been – and continues to be – initial earth moving work by the end of 2018, the airport to be operational by 2026, and Treasurer Scott Morrison will have more to say about the details in next week’s budget. This is a very significant milestone towards delivery of Western Sydney Airport and Western Sydney Airport being operational by 2026.

Question: Minister, just to confirm, the Federal Government’s confirming it’s going to cover the entire expected $5.5 billion cost to build?

Paul Fletcher: Well, the Turnbull Government will build Western Sydney Airport, that’s our commitment. More details of the finances will be given by the Treasurer in the budget next week. But the Turnbull Government will build Western Sydney Airport itself, that’s our commitment.

Question: Now, Sydney Airport said today it chose not to build this airport because it was too risky – too much of a risk to its investors. Are taxpayers risking being lumped with a white elephant?

Paul Fletcher: Sydney Airport Group today said that this opportunity did not meet its investment criteria. That’s a decision for Sydney Airport Group to take, in the interest of its investors, and I do want to acknowledge the very constructive and professional engagement between Sydney Airport Group and the Commonwealth over a consultation period, which has lasted for well over two years. But, of course, governments can take a longer-term perspective than private sector investors and governments want to see economic growth and opportunities, in addition to the purely financial benefits. Now, it’s clear that by proceeding to build Western Sydney Airport the government will be acquiring an asset and that has significant value. More details about the financial arrangements will be revealed by the Treasurer in the budget next week, as is appropriate, as we’re within a few days of the budget. But certainly, it makes good sense for the government to proceed with building Western Sydney Airport.

Question: Have you ruled out a third party investor as well? Or would you accept that if some sort of commercial entity was to come along and offer to take on this job?

Paul Fletcher: The Turnbull Government has very carefully considered the options, as we’ve been working through this period - when Sydney Airport Group has been considering this Notice of Intention – we’ve been doing detailed contingency planning and the decision we’ve taken as to the way forward, is that, the government will build Western Sydney Airport. That’s the path we’re now moving forward on, that’s the path that we’ve announced today, now that Sydney Airport Group has announced that it will not be taking up its right of first refusal.

Question: Were other corporations looked at besides Sydney Airport? Were there other businesses in the mix?

Paul Fletcher: Certainly the decision that the Commonwealth Government has taken is that we will be proceeding to build Western Sydney Airport, and that’s a decision that’s been taken based upon looking at the options available to the Commonwealth and based upon our commitment to delivering Western Sydney Airport so that it’s operational by 2026. So that we commence initial earth works by the end of 2018 and so that Western Sydney Airport can deliver the jobs and the economic opportunities that it is able to do.

Question: When did you know that Sydney Airport Group would reject the deal? Or didn’t you?

Paul Fletcher: We received formal notice from Sydney Airport Group this morning and they gave us that notice as soon as they could after having had a board meeting to reach a final decision, which I understand was yesterday evening.

Question: Is it likely to be structured similar to the NBN?

Paul Fletcher: Well, in terms of how the Commonwealth’s commitment to building the airport will be structured, the Treasurer will be announcing the arrangements there in the budget next week and so more details will be provided at that time. But a very clear decision being announced today, the decision that’s been carefully planned, that the Turnbull Government will be building Western Sydney Airport itself and more details will be provided as to the financial aspects of that by the Treasurer in the budget next week.

Question: At the end of the day, this is going to be a better deal isn’t it for residents and for users of the airport to have two competitive players in the marketplace, rather than two airports owned by one [indistinct] organisation. This is a good day, isn’t it, for travellers and passengers?

Paul Fletcher: This is a very good day as an important milestone towards the delivery of Western Sydney Airport, with Western Sydney Airport to be operational by 2026. And what we now know is that within 10 years, there will be two airports in the Sydney basin under different ownership and each free to pursue their own strategy.

Question: Will this have repercussions for the funding of the rail link?

Paul Fletcher: The process in relation to ground transport is separate from the decision in relation to the airport itself. So, first of all, there is very good ground transport connectivity planned and already under development under the Western Sydney Infrastructure Plan, $3.6 billion. The M12 Motorway will be built to run from the airport to the M7 and connect into the central motorway network. The Northern Road – not too far from where we’re standing now – will be upgraded to four lanes all the way. Bringelly Road will be upgraded, so there’ll be very good ground transport connectivity. In addition, the New South Wales Government, the Berejiklian Government, is working together with the Commonwealth Government, the Turnbull Government, on a join scoping study into the rail needs of Western Sydney and Western Sydney Airport. That joint scoping study is looking at the Question:what would the right route be for a rail into Western Sydney Airport, when should it be built, how much will it cost, how should that be funded? That joint scoping study will report to the two governments by the middle of this year, and we’ll have more to say about the way forward once we’ve received that.

Question: But the bottom line is we probably won’t have a train operational by the time the airport’s operational?

Paul Fletcher: Well, the position is that we’ve got this joint scoping study that is looking at the question of when should rail be built, how much would it cost, how should it be funded, and that advice will come to the two governments by the middle of this year. The Prime Minister, in his speech last year, said that his challenge to the team doing its work was can rail be built by the time the airport is open, and if not how soon after?

Question: What interest have airlines shown to you, the Government?

Paul Fletcher: Western Sydney Airport will be closer than Kingsford Smith Airport for some 2 million people. It’s a very important catchment area, a very important market, and it is clear from the conversations that I’ve been able to have with airport executives, with airline executives, it is clear from the conversations I’ve been able to have with airline executives that they find that an attractive market. And certainly, the Government expects, based on those conversations, that there will be operations here from the outset. There will be a particular focus on the leisure market, and I think we can expect there will be services to capital cities, to locations like New Zealand and Bali.

This will also be an airport which will offer opportunities for international airlines which have been unable to get land spots at Kingsford Smith Airport. And so, based upon all the work we’ve done, we are confident that there will be significant interest from airlines from the very first day. And I’ve had the opportunity just today to speak to both John Borghetti, chief executive of Virgin, and Alan Joyce, chief executive of Qantas, and both have certainly confirmed that they regard this as an important milestone. And the Government is in regular discussions with those airlines and, indeed, as we move forward we’ll be in discussions with other potential customers, as you would expect, over the period between now and 2026.

Question: Can you just comment on connections, why so long?

Paul Fletcher: This is a very, very significant and substantial project. If you look around you, you can see that we’re on reasonably hilly terrain. It’s about a variation of 40 metres of that order of magnitude, and so the earth-moving task here across 1800 hectares is very significant. Then of course we’ve got the construction task, so there’s a lot of work to do. There’s also a lot of work to do in the detailed flight path planning and all of those requirements. So this is a complex, significant project. Today is a very important milestone because we now have clarity about who is going to build the airport. That is a very significant milestone. This is a large project, and so the timing of 2026 for the airport to be operational has been carefully looked at based upon the elements that will have to occur for the project.

Question: And if the Government’s going to build, who’s going to operate it?

Paul Fletcher: Well, the question as to who operates it is one that can be considered at a later stage. There are certainly options under the federal Airports Act, under the Commonwealth Airports Act, for owners of airports to appoint managers of airports, and we’ll certainly look at those options as we go on. But the key point is the Turnbull Government has committed that the Government will build this airport – and this is very important – so we can move forward to meeting our timeframe and commitments.

Question: What about Camden Airport?

Paul Fletcher: There’s a detailed flight path planning process that will be worked through by Airservices Australia and by CASA – the Civil Aviation Safety Authority; there’ll be extensive community consultation with the Forum on Western Sydney Airport – or FOWSA. And one of the issues to be worked through in the flight path planning is the implications for other airports, general aviation airports, as well as other major users of airspace in the Sydney basin, and of course traffic to and from Kingsford Smith, and also military traffic. So all of those issues will be worked through [indistinct]. Okay, thanks very much.