Western Sydney Airport Corp’s Paul O’Sullivan warned: don’t do an NBN

The chair of the company building Sydney’s second airport has been urged to avoide creating a ‘Wright brothers NBN’.

Badgerys Creek should avoid the pitfalls of the NBN under Western Sydney Airport Corporation’s new chairman.

The new chair of the government-owned company building Sydney’s proposed $5.3 billion second airport has been urged to ensure the project does not end up as “the Wright brothers NBN”.

This week, after the government announced that Optus chairman Paul O’Sullivan would be chairing the Western Sydney Airport Corp, Infrastructure Partnerships Australia chief executive Brendan Lyon said Mr O’Sullivan was a “great appointment” because of his experience in regulated infrastructure “and the ringside seat he’s had to observe the NBN’s major delivery and risk management challenges”.

“The NBN is a salutary warning of what can go wrong when governments select ‘off budget’ accounting, as they have for the new airport and also the inland rail corridor,” Mr Lyon said.

He said the NBN had delivered “far less at much greater cost than was promised”.

The proposed Badgerys Creek airport was “a great opportunity for the country, but the corporate and project governance will need to be strong and unusually disciplined to make sure it doesn’t end up the Wright brothers NBN”.

In announcing Mr Sullivan’s appointment, Finance Minister Mathias Cormann and Urban Infrastructure Minister Paul Fletcher pointed to his “deep experience leading an infrastructure business as it established market share against a long- established incumbent”.

The government also announced other WSA Co board members: Airservices Australia ­director Fiona Balfour, aviation infrastructure and airport operations expert Christine Spring and professional services expert Tim Eddy.

More board members are expected to be announced in coming months, while the board will also have to search for a chief executive and senior managers.

The government will make an equity investment of up to $5.3bn in WSA Co to fund the first stage of the airport’s development.

The model is similar to the NBN Co, where the government has made an equity contribution of $29.5bn but has also agreed to lend the project $19.5bn for five years to complete the rollout.

The treatment of the NBN means that if its returns fall to below the bond rate, the government would have to treat the costs as a direct expense rather than a capital investment in the budget, which would hit the budget deficit.

Mr Lyon’s comments come amid concerns about the use of off-balance-sheet methods to deliver major projects.

Outgoing Infrastructure Australia chairman Mark Birrell has previously said that while a good business case has been established for Badgerys Creek, he is wary of the expenditure now being channelled off the federal budget balance sheet into WSA Co.

Other senior figures in the sector have raised fears of the private sector being squeezed out if the government finances, procures and operates new projects.

According to the new WSA Co website, the contract for the main package of works to design, develop and deliver the airport will be awarded in 2019. Work will begin soon after.

The project will also require “enabling” activities that will include: site decontamination work; moving a 330kV high-voltage TransGrid overhead transmission line underground; air and noise monitoring; bedrock analysis; land surveying; and moving a million cubic metres of soil.