Badgerys Creek airport row a threat to jobs push

A row over the $5bn bill for the nation’s next big airport threatens to undermine one of the PM’s flagship ­projects.

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

A row over the $5 billion bill for the nation’s next big airport threatens to undermine one of Malcolm Turnbull’s flagship ­projects, as the federal government intensifies pressure on Sydney Airport Corporation to pay for more of the mammoth ­construction.

The government is demanding a bigger contribution from the listed company to win the right to operate the new airport at Badgerys Creek, taking a hard line in a plan it will release within days to set the terms of the deal.

Sparking fears of an ultimatum that could turn Sydney Airport Corporation away, the government is seeking a maximum cash commitment to help prepare the site, develop the runway and build a terminal that can handle 10 million passengers a year by 2030.

The ambitions are critical to the Prime Minister’s vow to use the new airport to spur economic development across western Sydney, where the Coalition took a battering at the last election when voters shunned its promises of jobs and growth.

While investment analysts ­assume Sydney Airport Corporation will have to contribute about $1bn to the project, The Australian has been told the government wants a bigger commitment and is willing to go its own way if the company turns down the deal.

The prospect has alarmed ­observers who fear the vast project will take longer and cost more if the government tries to do the work on its own, sparking parallels with the delays and cost blowouts at the National Broadband Network.

Major Projects Minister Paul Fletcher will launch the final phase of talks with Sydney Airport Corporation in the next few days by issuing a 1000-page ­“notice of intention” that tells the company what it must do to ­become the Badgerys Creek airport operator.

Both sides are bracing for four months of negotiation over whether it is better to get the company to run both major airports or have the government fund the construction so it can select a new operator to heighten competition.

Tensions over the cost appear likely to trigger an “extra time” clause that will stretch the negotiations to nine months, delaying the building work and the economic gains.

Mr Fletcher has been tight-lipped on whether the government would go it alone when Sydney Airport Corporation has repeatedly stated it wants to ­secure the contract, while observers believe it would be dangerous to reject the private operator.

Christopher Brown, the chairman of the Western Sydney Leadership Dialogue and a member of the commission that chose ­Badgerys Creek as the site for the city’s next major airport, said: “To nationalise an airport now would beggar belief. The government ought to fight hard for the best deal for taxpayers, absolutely — I’ll cheer them on. But if the ­ultimate aim is to nationalise an airport I do not want western ­Sydney to become an ideological plaything. We’re not a social ­experiment; we’re the most ­dynamic economy in Australia and we’ve already waited too long for the airport.”

Mr Brown is chairman of the Taylor Street Consultancy, a lobbying firm that lists Sydney Airport as one of its clients on the federal government’s lobbyist register. Other clients include property developers Lend Lease and Walker Corporation.

Mr Brown argued that the ­Victorian approach, where a new operator was brought in to run the Avalon airport and compete with Tullamarine, had been a disappointment.

The speed of construction is vital to the government’s goal of boosting the national economy, given a Deloitte analysis claiming the project would add at least $16bn to economic output from 2020 to 2050, adding at least 20,000 jobs to the greater Sydney region.

Gains of that size will only be achieved if the airport opens on time in the mid-2020s and ramps up quickly to carry millions of passengers.

Sydney Airport Corporation has the first right of refusal to run Badgerys Creek under the terms of the company’s 2002 privatisation, but it would not comment yesterday.

While the company’s former boss Max Moore-Wilton argued against a second Sydney airport, its chief executive, Kerrie Mather, is backing the project.

“We believe we are uniquely placed to deliver the new western Sydney airport and grow aviation for the benefit of Sydney, NSW and Australia,’’ Ms Mather has said.

UBS investment bank analyst Simon Mitchell estimated the western Sydney airport would start with three million passengers and reach 5.5 million by 2030, with an investment of about $1bn from Sydney Airport.

The government’s harder stance contrasts with the strategy of former treasurer Joe Hockey who proposed a tax of up to $10 per passenger in and out of Kingsford Smith Airport to fund the construction.

Treasury had reportedly modelled the levy and legislation was in the process of being drafted before Tony Abbott lost the prime ministership, triggering Mr Hockey’s departure from politics. Mr Hockey believed the levy would have secured the airport’s future rather than waiting for private capital investment.