Mon, 08 Nov 2021 - 10:46
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Western Sydney International Nancy-Bird Walton Airport: An update on progress and policy

Introduction

It is great to speak at the AFR Infrastructure summit – and particularly to do so in person.

The Morrison Government has an ambitious 10-year, $110 billion infrastructure agenda. Today I want to speak about our policy agenda for Western Sydney International Nancy-Bird Walton Airport. Because it is a great case study of what the Morrison Government is seeking to do with infrastructure policy.

First, we want to deliver a great airport – and I will touch on the progress of the project.

Next, the airport is the centrepiece of the Western Parkland City – so I will speak of the huge and multifaceted effort, across Commonwealth, state and local government, to deliver this city, including land use planning; new transport infrastructure; attracting businesses and jobs to the area; and much else besides.

Third, we see the airport as a major economic policy tool, not only boosting Western Sydney’s economy but also stimulating Australia’s aviation market and supporting our export industries.  For that reason I will speak about some key policy choices we have made which are designed to achieve these objectives.

Delivering a great airport

Let me turn first to the airport itself. 

This $5.3 billion project is already nearly one quarter complete.

I visited the site last Monday, and the progress since I was last there in June, before the lockdown, was jaw-dropping. 

The bulk earthworks - on a site around three times the size of the Sydney CBD – is now three quarters complete.  Nearly 21 million cubic metres of earth has been moved.

The contract for construction of the terminal has been awarded to Multiplex - and work will start before the end of the year.  This will be a very important public building – and it has been designed to reflect the confidence and aspirations of Western Sydney.

The terminal will have Australia’s first fully digitally automated baggage handling system – with passengers able to track their bags via an app to know exactly when it will arrive at your pick up destination.

The contract for the airside pavements package, which will include the 3.7-kilometre runway and rapid-exit taxiways was awarded recently to a CPB Contractors and ACCIONA joint venture, with construction to commence next year.

Early next year, the final major construction contract, for landside civil and building works, will be awarded, along with the technology package.

The airport is on track to open by late 2026 – and by 2032 it is expected to be serving around ten million passengers a year. 

Building the physical facility is only part of the job.  At the same time the airport’s management team is working hard to attract potential users.  Airlines are showing strong interest – the major domestic airlines but also some thirty foreign operators. 

That interest reflects the compelling proposition offered by Western Sydney International. It will have the third largest passenger catchment of any Australian airport; the flexibility of being Sydney’s only unrestricted, 24/7 international airport; and operating practices which will help airlines be more efficient and get greater asset utilisation. 

There is also strong interest from the freight industry in Western Sydney International’s air cargo precinct. Here too the proposition includes modern, efficient operating practices.  But the freight industry is also attracted by the airport’s location, close to the fastest growing areas of Sydney and to myriad logistics hubs including Moorebank Intermodal; and the airport’s excellent connectivity with billions of dollars being spent by the Commonwealth and NSW Governments on upgraded road infrastructure.

At the heart of Western Sydney International will be a great customer experience. For passengers, that means flying from Sydney’s new airport will be fast, easy and seamless.  For airlines and air cargo operators, that means more efficiency and greater value than is presently available in Sydney, with faster turnaround times, and higher levels of reliability.

The Western Parkland City

But if we just set ourselves the task of building a new airport, we would miss a huge opportunity.  Western Sydney Airport can boost economic growth, regional development and liveability in Western Sydney.  That is why, with a coordinated plan, three levels of government are working together to deliver the Western Parkland City. 

Let me remind you of the multiple policy levers being used to realise this ambitious vision. 

Build a great airport

The first policy lever is to build a great airport.  If the airport attracts airlines and passengers, it will in turn generate jobs – an estimated 28,000 by 2031; it will attract businesses to locate nearby; and it will catalyse regional and national economic activity.

A planning vision for a third city

The second policy lever is a planning vision for a third city in the Sydney basin – a vision articulated in 2018 by the Greater Sydney Commission in its Greater Sydney Region Plan - Metropolis of Three Cities.

Under this vision, Greater Sydney is a metropolis of three distinct but interconnected cities in which most residents live within 30 minutes of jobs, education and essential services.  The Western Parkland City will be anchored by the new Western Sydney International Airport and the economic activity and jobs which it stimulates. It is intended to attract investment and industry, with the benefit of this activity to accrue across the whole city.

A new rail spine for the third city

Giving form to this planning vision the rail spine for the third city: a 23 kilometre metro rail line to run from St Marys south to the Aerotropolis through four intermediate stations including two at the airport, funded jointly by the Commonwealth and NSW governments at a cost of nearly $11 billion. 

Each of these stations can be surrounded by carefully planned centres featuring public spaces, job-generating investment and education opportunities, medium and high density housing, shops, cafes and restaurants and other facilities.  This rail link is a rare example of doing what all the experts advise – get the transport links in place in time for the new jobs and housing, rather than leaving transport to be an afterthought. 

Great transport connections to the airport

The new WSA metro of course also delivers a great transport connection to the airport. It will sit alongside the new $2 billion M12 motorway that will connect the M7 via Elizabeth drive to the airport from the east, and connect the Northern Road to the airport from the west. 

A carefully planned new CBD

The next policy lever is the carefully planned new CBD for the Aerotropolis, the Bradfield City Centre.  This will be centred on 115 hectares of land at North Bringelly which was recently transferred from Commonwealth to state government ownership. 

Served by a station on the new metro rail line, activation of the Bradfield City Centre has been underpinned by a $1 billion investment from the  NSW Government. This investment will deliver enabling works for the site, along with a First Building and investment in an education and skills program. This will provide the basis for future private sector investment in Australia’s most green, connected and advanced city.

The Bradfield City Centre will support wider employment, education and training opportunities and help to drive the creation of 200,000 new jobs across the Western Parkland City.

Land use planning for the third city

Of course the careful approach to planning extends well beyond Bradfield.  Under the NSW Government’s strategic planning approach, a range of precincts have been identified around the airport, extending across some 11,200 hectares of the Western Sydney Aerotropolis. These include an Agribusiness precinct and Northern Gateway precinct.

The Western Parkland City Authority has been charged with the delivery of the Bradfield City Centre. It also has a key role in the coordination of activities across the Western Parkland City, working with the Greater Sydney Commission.  As a powerful example of the close co-operation between governments, three directors of the WPCA are appointed by the NSW Minister and three are appointed on the recommendation of the Commonwealth Minister, with the chair jointly agreed.

Liveability planned in from the outset

Making the Western Parkland City highly liveable is a key focus of this planning approach.  This includes setting aside large areas for parks and public recreation; planning for extensive tree cover for many reasons including helping ground keep temperatures lower in summer; and allowing residents to locate close to jobs and schools so as to minimise commuting time.

Business and investment attraction

Of course if you want people to live near jobs, you need the jobs.  Hence another policy lever is attracting the businesses and institutions that will generate jobs.  Some of that will arise naturally as the airport generates jobs and attracts businesses to locate nearby. 

But we are reinforcing that with an aggressive investment attraction strategy. The NSW Government has signed 18 Foundation Partner MOUs with domestic and global businesses which have an interest in locating or investment in the Aerotropolis.  These include companies like Northrop Grumman, Hitachi, Siemens and GE Additive. This investment attraction strategy is ongoing, with new partnership opportunities being progressively being entered into.   

A key responsibility of the Western Parkland City Authority is to deliver, coordinate and attract investment to the precincts that make up the Aerotropolis.

Also part of the plan is new education and training opportunities, like the New Education and Training Model being rolled out by the Western Parkland City Authority. There is also ongoing collaboration between the NSW Government and leading tertiary education institutions, including Sydney University, UNSW, University of Wollongong and Newcastle University and UTS as well as vocational education working with TAFE NSW. This is all intended to give companies interested in coming to the Aerotropolis and the Western Parkland City confidence about the supply of trained workers. 

Coordinating three levels of government through the City Deal

The various policy levers I have spoken of are being deployed by different levels of government – so we need a mechanism to coordinate the three levels of government as we work to deliver this ambitious vision.  This is where the Western Sydney City Deal comes in: it is the vehicle through which all three levels of government are working together.  The deal was signed in March 2018; just last Friday I joined NSW Minister Stuart Ayres and council leaders in one of the regular Leadership Group meetings which oversees progress. 

A Major Economic Policy Tool

I want to turn now to the role of the airport as a major economic policy tool.  As I have discussed, a key objective is to boost the economy and generate jobs.  Under the Western Sydney City Deal we have set a target of creating 200,000 jobs in the Western Parkland City over the next 20 years.

But while the most immediate impact of the new airport will be the regional economy of Western Sydney, it will be felt across the nation. The economy-boosting power of airports is recognized around the world. Here for example is what the Davies Commission – appointed to consider the question of expanding aviation capacity for London – said in its 2015 report:

Good aviation connectivity is vital for the UK economy. It promotes trade and inward investment, and is especially crucial for a global city like London. The service sector, whether the City, the media industry or universities, depends heavily on prompt face-to-face contact. There is strong evidence that good transport links, and especially aviation connectivity, make an important contribution to enhancing productivity…[1]

The economic impact of Western Sydney Airport will operate through a number of levers, but I want to point particularly to the way it will stimulate Australia’s aviation market nationally.  Today, there are only limited slots available at Kingsford Smith Airport – which in turn seriously constrains the prospect of additional competitive entry into the domestic aviation market.  If you want to operate a domestic airline but you do not have strong access to the Sydney market, you are starting from a very weak position. 

Western Sydney Airport will change that.  There will be abundant capacity – at an airport designed to be highly productive and efficient for airlines.  We believe it will stimulate new levels of competition in domestic and international aviation – in turn bringing benefits to passengers and to the freight market and flow on benefits across our economy. 

Just think about the holiday towns around Australia which have airports big enough to take a turboprop aircraft like a Q400 or a jet aircraft like a 737 or A320, but which do not have regular service today.  This describes several towns on the south coast of New South Wales.  Western Sydney International Airport could well catalyse the arrival of new discount operators who can find a profitable business model to operate routes that today are not operated.

Another economic lever will be through the impact on Australia’s export industries. The cargo precinct at the airport will provide capacity for operators to meet the growing demand for freight in the Sydney basin. This, combined with access to 24/7 operations, will help our exporters access global markets - from medical equipment manufactures to live seafood producers.  We expect 220,000 tonnes of air cargo to move through the airport each year.

This new airport will also stimulate inbound tourism, particularly by offering an attractive new option to international discount airlines.  Today airlines flying into Kingsford Smith can face the prospect of leaving an aircraft on the ground for much of the day due to the curfew; this means poor asset utilisation of a hundred million dollar plus aircraft.  At Western Sydney International there will be no such barrier. 

I have spoken about various ways in which Western Sydney International Airport will boost economic activity and enhance productivity and efficiency. Central to this is unleashing the power of competition. We are applying lessons from industries like telecommunications, where since 1990 there has been intense competition, innovation and investment, from multiple players, most privately owned.

It is no coincidence that we chose Paul O’Sullivan as the chair of Western Sydney Airport. As a former chief executive of Optus he has unparalleled experience in competing against an incumbent in a capital intensive infrastructure business, and in delivering a superior customer experience as a central element of the competitive strategy.  Of course Simon Hickey as Chief Executive has deep aviation experience including leading Qantas’ international business for some years.

The board and management team of the airport have impressive private sector and aviation experience – which they deploy on a daily basis as they develop and execute the business strategy of Western Sydney Airport.  Since this team took control in 2017 the project has raced ahead, reflecting commercially smart choices made at key points – and their sense of urgency and a hunger to get the airport operational. 

A good example is the 75,000 square metre cargo precinct at the airport: this will feature open access cargo terminals rather than being locked up by any one operator.  This makes more sense commercially for the airport; it also boosts competition and hence productivity in the air freight market. 

It is very important that the airport thrives as a business.  The integrated policy approach I spoke about earlier – across land use planning, investment attraction and jobs generation, and so on, involving the coordinated effort of three levels of government together with the private sector – will only succeed if the airport succeeds as the economic engine at the core of all of this.

In turn if the airport succeeds as a business then in due course it will prove to be a successful investment for taxpayers.  The time will come, once the airport is operational and established, the business model well proven, and the cash flows stable, for ownership to transfer into private hands.  But it makes much more sense, during the initial phases of the airport’s construction and operation, for it to be owned and operated as a government business enterprise. 

Government has many roles here, of which being a wise steward of taxpayers’ capital is but one.  If we maximise the economic impact of the airport – through all of the careful planning and execution across many fronts as I have described – then that will in due course have the incidental benefit of allowing the airport to be sold and a good return realised for taxpayers.  But there are many years of work in front of us before that can be contemplated.

Conclusion

I conclude, then, by returning to my central claim today: that Western Sydney International Airport is not just another infrastructure project. It forms the central part of a major piece of policy architecture, spanning economic policy—including competition policy—and regional development.

The airport is the core of a bold social and economic vision, across three levels of government, for the Western Parkland City. To turn the vision into reality, the airport needs to be a success: as a community facility; as a business; and as an attractor of investment. 

Given the enormous and multistranded effort under way, as I have explained today, I am confident that the vision will be realised. 

In years to come I believe we will see Western Sydney International Airport – together with the ground infrastructure, the land use planning, the City Deal, the Western Parkland City Authority and all the other elements of this enormous constellation of projects – as transformative for jobs, growth and amenity, for Western Sydney and the nation.

It will also be, I believe, a powerful model for future public policy.

This speech was delivered to the Australian Financial Review Infrastructure Summit on 8 November 2021

 

[1] Airports Commission:Final Report July 2015, https://www.gov.uk/government/organisations/airports-commission, downloaded 12/11/16, p 4