Badgerys Creek: Government-Sydney Airport in $3 million impasse over construction

THE Turnbull government is staring at a potential $3 billion-plus problem as it waits to see if the operators of Sydney Airport will take up the Badgerys Creek project.

• Badgerys Creek Airport finally takes flight
• New ‘airport the key to Sydney’s future economic growth’

THE Turnbull government is staring at a potential $3 billion-plus problem as it waits to see if the operators of Sydney Airport will take up the Badgerys Creek project.

Urban Infrastructure Minister Paul Fletcher has warned the “clock is now ticking” as Sydney Airport argues it should get a full nine months to consider whether it will ­accept the proposed offer.

And the impasse that needs to be overcome for an agreement to be struck is significant.

An artist’s impression of the new Badgerys Creek airport to be built in Western Sydney.

The Daily Telegraph understands the option of a contribution from the Commonwealth, in the form of a long-term loan of between $3 billion and $4 billion, was talked about during earlier discussions around the project. But it is unclear whether any actual commitment was made.

The Labor MPs trying to stop our second airport taking off

The total estimated cost of the Badgerys Creek airport is expected to exceed $5 billion.

Both sides refused to comment on what was discussed during negotiations.

Prime Minister Malcolm Turnbull and Federal Urban Infrastructure Minister Paul Fletcher formally sign off on the new airport plan. Picture: AAP

However, a June UBS report noted the analysts would “expect a significant government contribution such that any Sydney Airport capital contribution is limited to $1 billion of equity”.

“We believe the remaining $3-$4 billion would likely come from government funding and potentially asset level debt,” the report said.

Sydney Airport has demanded nine months to consider the notice of intention issued by the government, but the Commonwealth argues it is familiar enough with the proposal that it should only have until May.

Badgerys Creek in Sydney’s West has been designated as the site of a second airport.

In the event Sydney Airport walks away, the government would either build the airport itself and enter into management agreements with a private company to run it, or approach other private sector players with similar terms.

During the consultation process, the government engaged with other domestic and international businesses.

Sydney Airport has told the ASX it would need “material support from the Commonwealth to make it commercially viable”, while the federal government insisted it was providing financial assistance in the form of investment in roads and preparatory work.

The project is expected to create tens of thousands of jobs.