Developing Greater Western Sydney Conference

Speech

PFS012/2017

24 August 2017

Novatel Sydney, Parramatta

Taking a Western Sydney perspective and realising potential of the region

At this important conference I want to talk to you about the Turnbull Government's plan for the growth of Western Sydney.

The centrepiece of that plan is Western Sydney Airport—and so I will start by updating you on the progress of this transformational project.

Next I will discuss the potential of this enormous, once-in-a-century investment—to be the core of a new ‘third city’ in Sydney and in turn to drive jobs and economic growth outcomes.

In the final part of my remarks I plan to explain how we are working together with the state government, local governments and the private sector to capture this potential—with work going on across many fronts.

Progress on Western Sydney Airport

Let me start by reflecting on just how far we have come on Western Sydney Airport since the Coalition has been in power federally.

Five years ago, the Sydney Morning Herald ran a series of articles on the question of a second airport for Sydney, with headlines like “Airport debacle stuck in eternal holding pattern” and “Airport chaos imminent but the cockpit's vacant”. 

The author, Lenore Taylor, described it as “a decades-long story of political myopia and cowardice.” She noted the difficulties then Transport Minister Anthony Albanese faced on the issue following Labor's 2003 decision to rule out an airport at Badgerys Creek.

That all changed when a Coalition Government came to power in 2013—and in 2014 took the decision to proceed with the new Western Sydney Airport at Badgerys Creek.

A comparison to five years ago is instructive—but I found it equally instructive, in preparing my remarks today, to look back at where things stood just over a year ago when I spoke at this same conference.

Let me recap on what has happened since then.

A year ago there was a draft environmental impact statement. Now a final EIS has been issued and approved.

A year ago there was a draft airport plan. Now a final airport plan has been determined, with over 40 conditions placed on the development.

This means there is now formal regulatory approval to build an airport at Badgerys Creek.

A year ago we were still engaged in consultations with Sydney Airport Group under its right of first refusal to build Sydney's second airport —granted when Kingsford Smith Airport was privatised in 2002. We did not know, a year ago, whether Sydney Airport Group would take up its right of first refusal, nor the terms on which this might happen.

Now we have clarity—Sydney Airport Group declined to take up its opportunity in May this year. This followed the Government issuing it with formal documentation—the ‘Notice of Intention’—in December last year, which in turn set the clock ticking for Sydney Airport Group to take on the development or to pass on it.

The Notice of Intention also set out the terms which would apply if Sydney Airport Group did exercise its option to build and operate the airport. In particular, it made it clear that the Government would not be providing concessional financing to Sydney Airport Group.

A year ago we did not know who was going to build and own the airport.

Today we know that it will be a government owned company, WSA Co.

The company was formally established earlier this month and the first four directors have been appointed.

The chairman is prominent businessman Paul O'Sullivan, the current Chair and former Chief Executive of Optus, who serves on a number of other boards.

Fiona Balfour, former Chief Information Officer at Qantas; Tim Eddy, former Managing Partner at EY and Christine Spring, an engineer and airport design expert with extensive experience at Auckland, Melbourne and Abu Dhabi airports, are the other directors.

Collectively they bring a wide range of commercial and aviation expertise—and a proven track record of delivery in the private sector.

A year ago we did not know who was going to pay for building the airport. Now we know, following the Turnbull Government's announcement in the May budget that we would be injecting up to $5.3 billion of equity into WSA Co to fund construction.

A year ago there was no community consultation mechanism established for Western Sydney Airport. Today the Forum On Western Sydney Airport (FOWSA), chaired by Professor Peter Shergold AC, Chancellor of Western Sydney University, is up and running, with the second meeting to be held next week.

FOWSA has 23 members, drawn from locations including Camden, Liverpool, Penrith, Fairfield, and the Blue Mountains, and includes local government and community representatives, politicians from both major parties, and representatives of affected businesses.

A year ago there were still a number of tenants living on the 1800 hectare airport site at Badgerys Creek. Today demolition of existing structures is all but complete, and the site is being readied for construction.

Perhaps the biggest difference is that a year ago we did not know with certainty what the timetable was for key next steps on the airport, particularly the commencement of construction.

Today we have a very clear sense of the next steps and timetable. Let me run through it for you.

The immediate priority of WSA Co is to appoint the CEO and the senior management team, and to begin procuring the first stage of construction activities. 

The company expects to issue an early works procurement package by the end of this year. This will include initial bulk earthworks and stock piling, further geotechnical work and comprehensive site surveys. Work on the site under this package will commence before the end of 2018.

WSA Co will also work with TransGrid to relocate underground the existing high voltage transmission line which runs across the site.

Over the next few months we will appoint more directors to bring the board to full strength. We expect these to include directors with construction expertise and experience in Western Sydney.

An early priority for the company will be establishing permanent offices. It is very important that these be located in Western Sydney. The company needs to be based close to the airport site at Badgerys Creek—and in a location where it can draw on the talented workforce of Western Sydney.

I am pleased to announce that the company will be located at offices on Scott Street in Liverpool. Staff will locate there before the end of this year.

Locating this $5.3 billion business in Liverpool is a vote of confidence in Liverpool as a great place to do business in Western Sydney. It will also give WSA Co the opportunity to partner with other key institutions based in Liverpool, such as the University of Wollongong which opened a new Liverpool campus last year and the University of Western Sydney.1

All of this means that the balance of 2017 is pretty busy for WSA Co. But after that it gets even busier, as the company turns its focus to the procurement process for the major design and construct contract. We can expect to see to a leading private sector construction company at the helm —or, more likely, given the scale of the project, a consortium of companies.

We anticipate WSA Co will conduct an open two-stage tender process, commencing next year, for a design and construct contract. The contract is expected to be awarded in 2019, with work commencing soon after.

The tender will cover a wide range of activities required to get the airport operational by 2026.

There will be earthworks to level around 22 million cubic metres of soil.

There will be the construction of a 3700 metre runway—able to be used by the largest commercial aircraft such as the A380—and aprons and taxiways.

There will be the building of a multi-level integrated domestic and international terminal, meeting detailed design and sustainability specifications.

There will be onsite road network and utility services connections.

I think you can see that there has been a fair bit of progress in the last year—and there is a lot to happen over coming months and years.

The Potential of Western Sydney Airport

Having made the case that the Turnbull Government is hard at work on delivering an airport, let me next turn to a more fundamental question: what are we trying to achieve by doing so?

There are three fundamental policy objectives. The first is to deliver additional aviation capacity for Sydney and the nation. As the 2012 Joint Study on Aviation Capacity in the Sydney Region found, if we do not take action Sydney Kingsford Smith Airport will soon face serious constraints.

By around 2027 all slots at Kingsford Smith Airport will be allocated. And by around 2035 there will be practically no scope for further growth of regular passenger services at Sydney Kingsford Smith Airport.

A second objective is giving people in Western Sydney better access to air travel. Today, if you live in Western Sydney, you can face a trip of more than an hour and a half to reach Sydney Kingsford Smith Airport, on the city's eastern edge.

That costs money as well as time. As one airline executive told me—his airline offers $69 airfares to Melbourne, but some customers travelling from Western Sydney are paying $180 in taxi fares.

Western Sydney Airport will end the unfair situation where people in Western Sydney have much poorer access to their nearest airport than people in other parts of Sydney, and in other cities of Australia.

The third objective is the boldest and most ambitious. As Lucy Turnbull of the Greater Sydney Commission has highlighted, the new airport can be the centrepiece of a third city for Sydney—to complement existing centres at Parramatta and the Sydney CBD.

Western Sydney Airport can be a jobs-generating core which in turn will attract, and complement, new residential and commercial development.

Looking around the world, it is clear that airports have a proven capacity to shape the future form, functionality and economic activity of large urban areas.

As Sir Howard Davies, Chair of the UK Airport Commission said in his December 2013 Interim Report on London's Air Capacity Needs:

Decisions on airport location and capacity are among the most important strategic choices a country or city can make, influencing the economic, environmental, and social development of cities and regions more than any other single planning decision.2

The international evidence is clear, at airports like Incheon in Korea, Dallas Fort Worth in the US and Schipol in the Netherlands. With good planning, airports can become economic hubs that drive the growth of a region. The ambition of the Turnbull Government, working with the Berejiklian Government in NSW, is to do the same in Western Sydney.

Some have described this as the notion that Western Sydney Airport will be the core of an ‘aerotropolis’. The definition of this term is

a metropolitan sub-region whose infrastructure, land use, and economy are centred on an airport.3

This economic jargon term is being used increasingly as people talk about Western Sydney Airport—because I think we can all see the potential benefits that such an approach could deliver.

For one thing, it would help address the jobs imbalance we face today. Western Sydney has a population of two million people and a workforce of one million. But of those, some 300,000 people leave the area for work every day.

This issue will become even more pressing if we do not take action. In the next twenty years the population of Western Sydney is expected to grow by one million people.

Locating an airport in Western Sydney therefore makes very good sense. Airports are proven job generators. Western Sydney Airport will bring jobs to the area—jobs that locals will be well placed to fill.

Typically the majority of people who work at an airport live nearby. At Kingsford Smith Airport, for example, around eighty per cent of workers live within a 30 minute distance.4

Another good example is Gatwick Airport in London. 84 per cent of those employed at Gatwick live in a ‘core employment zone’, which is made up of the 14 local government areas surrounding the airport.5

Over a third live in Crawley, the local government area the airport is located in.  The people living in this area and working at the airport earn, on average, more than those who don't work at the airport; in other words, the airport brings high-value jobs.6

In the short-term, of course, construction of the airport will boost the Western Sydney construction market and jobs in that sector. As Australian Construction Industry Forum executive director James Cameron recently said:

Obviously increased infrastructure spending is a boon for the construction industry, and future projects such as the building of Sydney's second airport provide confidence and optimism for the industry.7

The construction phase will offer big opportunities for local subcontractors. As the Liverpool Champion reported recently, local businesses can already see the impact the airport will have on the local economy and the potential for growth.8 President of the Liverpool Chamber of Commerce George Germanos had this to say:

Local contractors can expect to pick up more work and there will obviously be job opportunities for people across the Liverpool area.9

While jobs during the construction phase are extremely important, the even bigger prize is the jobs the airport will generate once operational. By the early 2030s there are expected to be nearly 9,000 direct jobs at Western Sydney Airport—and many more at the businesses that the airport attracts to the area.

Airports are not only proven job generators—they are proven attractors of businesses which in turn generate more jobs. As well as the 9,000 jobs at the airport, there are expected to be another 4,000 jobs at the business park which will be located on the airport site—and a further 7,000 jobs in businesses attracted to locate near the airport.

Let me spend a moment talking about the kind of businesses we expect to attract. There is plenty of evidence from other airports around the world—a number of which I have been able to visit in the last year, as I have looked for examples we can learn from.

One example is Incheon Airport in Korea, a massive airport which opened in 1999. Industries located nearby include logistics, financial services, international business centres, and manufacturing facilities such as pharmaceuticals. In the new town of Song-do, just across the bay, there are a number of international and local universities.

As we speak, NSW Premier Gladys Berejiklian is visiting Korea, including Incheon Airport and Songdo. She has used the visit to announce that the NSW and Australian Governments will next year host a summit looking at how we can make Western Sydney Airport the core of a thriving economic region. Korean business leaders, including from Incheon, will be invited to the summit, as will other key Australian and international industry leaders.

Another example is Schiphol Airport in the Netherlands, where there is extensive surrounding development including business parks, corporate headquarters and number of high-tech industrial parks.

Recently I visited Dallas Fort Worth Airport in the United States. It opened as the region's second airport in 1974 and now has 65 million passengers a year. A recent report found the airport generates $37 billion a year in total expenditure and supports 228,000 jobs, mostly in the north central Texas area.10

It is a powerful example of how building a new airport in a rapidly growing metropolitan area, with plenty of land around the airport for development, can drive economic growth and business attraction.

Today the area around Dallas Fort Worth Airport is occupied by a wide range of businesses. There are defence and aerospace businesses like Lockheed-Martin, Northrup Grumman and Bell Helicopter.

Major logistics players abound. Amazon has three fulfilment centres near Dallas Fort Worth and is currently building a fourth, with a total of four million square feet.

The big German medical equipment company Fresenius has its main US facility near the airport. It distributes across the US; its facility also hosts training sessions attended by medical professionals from across America.

Now Western Sydney Airport will start on a smaller scale than these three massive airports. But nevertheless the principle is clear: land use planning around the airport can help to attract the kind of businesses that gain value from the connectivity the airport offers.

These might be in advanced manufacturing—in pharmaceuticals or high-tech products; or conference and convention facilities; or logistics facilities handling perishable goods such as flowers and fresh meat and vegetables.

The expectation that the new airport will attract substantial investment is not just theoretical. Already we are seeing hard evidence with businesses announcing decisions to locate near the airport or in the surrounding region.

In the tourism sector, there are plans for a new 275-room luxury hotel in Luddenham at Twin Creeks Golf Club, and a new MGallery by Sofitel hotel at the Inglis Riverside Stables in Warwick Farm. As Margy Osmond, CEO of the TTF, recently stated:11

The benefit of the Western Sydney Airport to the region's visitor economy cannot be overstated —it will be a massive economic engine that will drive investment and jobs growth through the roof.

In defence and aerospace, the giant US company Northrop Grumman recently announced plans to build a $50 million centre of excellence near the airport, which will see its Australian employment numbers double from 500 to 1000. Northrop Grumman International president Dave Perry had this to say:12

The Government's strong commitment to grow the defence industry in Australia gave us the confidence to make this significant investment in western Sydney.

An important local project is the ‘Sydney Science Park’ project at Luddenham which held its opening event earlier this year.13 Recently a partnership was announced between Sydney Science Park and the University of Sydney. This will see Sydney Science Park and University of Sydney (Westmead) precinct members establish a presence on each other's campuses and share knowledge and expertise.14

Now if we are to best capitalize on the enormous potential of Western Sydney Airport, there are several things we need to do.

First, Western Sydney Airport needs to be successful as a business. It needs to attract airlines, passengers, and freight, and to grow rapidly once it begins operations in 2026. That is why it is so important that we have a high quality board and management with strong private sector experience and a strong focus on their customers.

Secondly, we need to make sure there is first rate ground transport connectivity. Thirdly, we need to make sure the land use planning around the airport facilitates and encourages the kind of economic development we want this airport to attract.

How We Are Working to Capture the Potential Of Western Sydney Airport

In the final part of this speech, therefore, I want to turn to the work we have underway to capture the full economic and growth potential of Western Sydney Airport. Given the constitutional division of responsibilities, it is clear that the Commonwealth has the primary responsibility to design, build and operate a successful airport.

But to achieve the overall economic objectives, we need a deliberate, and carefully considered, approach to strategic land use planning, industry attraction and transport integration. That in turn requires the Commonwealth to work closely with the NSW state government, local governments and the private sector.

For these reasons, the Turnbull Government is working very closely with the Berejiklian Government, including through the framework of the Western Sydney City Deal, on these issues.

Let me highlight four areas: first rate road connectivity to the airport; plans for rail connectivity; land use planning; and investment attraction.

The two governments are jointly investing $3.6 billion in the Western Sydney Infrastructure Plan. This includes a new M12 motorway connection linking the airport to the M7 and into the Sydney Motorway Network.

The Northern Road is also being upgraded to at least four lanes all the way along its 35 kilometre length from Narellan to Penrith . Recently the Prime Minister turned the sod on the first two stages of this work, from Peter Brock Drive to Jamison Road. As well, more than $200m has been committed through the Local Roads Package to support Western Sydney councils to undertake important local road improvement projects.

We also recognise the role that rail will play in the long term development of the airport and Western Sydney. This is why the Turnbull Government and Berejiklian Government are jointly conducting a scoping study on the rail needs of Western Sydney and Western Sydney Airport.  

This work is asking the question: what is the right route, when should it be built, how much will it cost and how should it be funded? The study is close to completion and I anticipate the two governments will have more to say about its findings in coming months.

At the same time we are working on plans for the airport to be ‘rail ready’, with the design of a rail corridor across the airport site itself. $26 million was allocated for this work in the 2016 budget.

The next issue of course is land use planning. Late last year the Greater Sydney Commission released draft District Plans for the West and South West Districts of Sydney. These plans identified the strategic planning opportunity that Western Sydney Airport provides for the surrounding area.

Since the release of those plans, Geoff Roberts—as Deputy Chief Commissioner of the GSC—has lead a productive conversation with the community, landholders, Councils, Government and industry, on how we shape strategic planning for the land surrounding the airport. This work will underpin future, more detailed, structure planning and land use decisions.

The Commission is also working with Transport for NSW on developing a new Future Transport Strategy for Sydney and a new Sydney Regional Plan. Both these tasks will be directly relevant to ensuring that there is a coordinated approach to strategic planning across Sydney, including on and around the airport site.

The final area to mention is investment attraction, where the two governments are working together closely. I mentioned earlier the recent announcement that Northrop Grumman will build a $50 million centre of excellence near the airport.

Together with the State Minister for Western Sydney, Stuart Ayres, and other colleagues, we have held a number of round tables and forums designed to highlight the economic opportunities the airport will present. In June we held a forum on tourism opportunities and earlier this week there was a forum with defence and aerospace companies.

Conclusion

Let me conclude by reiterating the key point that airports are proven city-shapers when planned right.

The development of Western Sydney Airport provides a unique opportunity to not just increase aviation capacity in Sydney and improve access to air services for the people of Western Sydney, but also underpin transformation of the area as the core of a third city in the Sydney conurbation.

This is a great opportunity for Australia, and there is enormous enthusiasm being shown by all three levels of government and by the private sector.

We can, and will, build a great airport. But we can do so much more.

Increasingly people are beginning to realise the remarkable possibilities.

I look forward to working with people in this room and beyond towards realising these possibilities.


1 http://media.uow.edu.au/releases/UOW213548.html.

2 http://www.businesschamber.com.au/NSWBC/media/Unfinished-Business/SBC-Thinking-Business-Aerotropolis-FINAL.pdf

3 Kasarda, John D. 2015. A Western Sydney Aerotropolis: Maximising the benefits of Badgerys Creek

4 Robert Freestone and Andrew Tice. 2013. “Airports as Development Generators: A reconnaissance of employment trends in the Sydney airport region 1996-2011.” State of Australian Cities Research Network

5 Gatwick Airport Limited. Employment and Skills Research 2015-2016. https://www.gatwickairport.com/globalassets/documents/business_and_community/2016-07-29-gatwick-employment-and-skills-research-final.pdf

6 Gatwick Airport Limited. Employment and Skills Research 2015-2016. https://www.gatwickairport.com/globalassets/documents/business_and_community/2016-07-29-gatwick-employment-and-skills-research-final.pdf

7 The Australian “Builders want their slice of the projects pie” 18 May 2017

8 Liverpool Champion “Airport to Create Jobs Now” 31 May 2017

9 Liverpool Champion “Airport to Create Jobs Now” 31 May 2017

10 https://www.perrymangroup.com/wp-content/uploads/Perryman-DFW-Airport-Impact-11-30-2015.pdf

11 Tourism and Transport Forum Australia Media Release, May 2017

12 https://www.industry.nsw.gov.au/invest-in-nsw/news-and-events/news/$50-million-investment-by-northrop-grumman-in-western-sydney

13 Celestino, Sydney Science Park. http://www.celestino.net.au/sydneysciencepark/residential

14 http://sydney.edu.au/news-opinion/news/2017/07/26/driving-innovation-in-western-sydney.html