Jun 16, 2015

Airports Amendment Bill 2015 – Second Reading

Mr ALBANESE (Grayndler) (17:16): I am pleased to be able to speak to the Airports Amendment Bill 2015 on behalf of the Labor opposition. I am pleased to do so because it clears the way to progress the plan to build a second Sydney airport. The bill seeks to clear up deficiencies in aspects of the Airports Act 1996, which create uncertainty and confusion about the process for establishing a second Sydney airport. I make it clear that the inadequacies of the existing legislation I do not blame the current government for but former governments, I think, deserve some legitimate criticism for the fact that that this bill was necessary to clean up, frankly, what was very bad legislation in a couple of aspects.

In that context, Labor will support this bill that is before the parliament. That is because we believe Sydney needs a second airport sooner rather than later. It is inconceivable that the economic development of Australia’s largest city should be held back by inadequate aviation facilities. That makes it critical that this parliament ensures that existing airport related legislation be fit for purpose.

We must ensure that the processes surrounding the development of a second airport are rigorous and comprehensive. In particular, we need to ensure that there is proper consultation with affected communities and that there be proper assessment of environmental impacts. This bill seeks to remove obstacles to the completion of these essential processes. It will help to ensure that the government gets the planning right, something vital for a piece of infrastructure as big and as important as a new airport. A new airport can drive employment and economic activity in Western Sydney. Indeed, the airport needs to be an airtropolis—something that is not just about planes going in and out but something that drives economic activity in job creation through the logistics sector, through the tourism sector and through the business sector for people in Western Sydney.

The Airports Act 1996 relates to existing federally leased airports. It is focused on regulating ownership, planning and development of those airports. Currently there are 21 federally leased airports including all of the main capital city airports around Australia. The act was put in place to manage the ongoing ownership and operation of our major airports following a process of privatisation of operations that occurred from the early 1990s through for more than a decade. One of those privatisations was the release of Sydney’s Kingsford Smith Airport, a transaction that occurred in 2002 during the period of the Howard government. I have had cause to speak of the Kingsford Smith Airport privatisation in this place before. I have been critical of the process surrounding that transaction because I do not believe that the deal represented the best possible outcome for taxpayers. That is why it is not surprising that the legislation before us today seeks to deal with some of the unintended consequences of that flawed transaction.

This bill also addresses the fact that Sydney’s airport is a greenfields development, something not contemplated by the regulatory structure of the current act. It also envisages the mandatory adoption of environmental conditions in any airport approval. The opposition welcomes this move because we believe that Sydney’s second airport must be developed in accordance with environmental best practice. We strongly believe that our national infrastructure—roads, railway lines, ports and intermodal facilities—must have the capacity to handle the requirements of the 21st century.

But we also believe that when we deliver this infrastructure we should do so with the utmost consideration of the environment as well as the legitimate interests of residents living in the vicinity of such facilities. Our community needs top-quality infrastructure to maintain community expectations and to underpin the economic growth that will provide jobs for this and future generations. But we also need top-quality processes surrounding the delivery of that infrastructure. With a project of this size and scale, there is little margin for error in planning. This bill will improve the government’s ability to get the planning right.

There is absolutely no doubt that the City of Sydney requires a second airport sooner rather than later. Those who believe otherwise are kidding themselves. Sydney is a global city. Its efficient operation is central to the economic productivity not just of New South Wales but of the entire nation. It is our major aviation hub. A delay at Sydney Airport has a knock-on impact around the nation because four out of every 10 aircraft pass through Sydney. When Sydney sneezes, aviation across the nation catches a cold.

The site of the existing airport is also problematic. Limited space and bottlenecks in the traffic networks surrounding the facility reduce the city’s economic productivity. In terms of space, it is less than either a half or one-third the size of Brisbane and Melbourne airports. Its geography, surrounded by the most heavily densely populated area of Australia with a bay to the south, means that there is a problem with capacity at the airport.

To those who say that Sydney Airport can take more flights, I suggest that they talk to people who have regularly landed at Sydney Airport late but have still been unable to get access to a gate, simply because of its size and the constraints due to the land that Sydney Airport has been built on. These inordinate delays are a handbrake on national infrastructure, and when there is a delay in Sydney it impacts right around the network. Indeed, there are many Sydney based parliamentarians, colleagues, who drive to Canberra rather than fly, simply because they can be certain of what time they will get to their destination. Many business travellers complain about missing interstate meetings due to delays, and many families have had their interstate or international holiday plans disrupted by delays.

Several studies have shown that a second Sydney Airport is needed and that what you need is good evidence based policy. The evidence that Sydney needs a second airport is in. The policy response is to get on with the business of building it, and this legislation will facilitate just that. As minister I commissioned an aviation green paper and white paper process. Arising out of that, one of the recommendations was that there be a study into Sydney’s aviation needs. This was funded as a joint New South Wales and federal study, commenced and completed under the former government.

The joint study reported on 2 March 2012. It was headed by the Secretary of the federal Department of Infrastructure and Transport, Mike Mrdak, and the head of New South Wales Planning, Sam Haddad. The study team also included the former Howard government minister Warwick Smith and Jennifer Westacott from the Business Council of Australia. The study found that air passenger demand in the Sydney region was forecast to more than double by 2035 to 87,000,000 passengers, and then double again by 2060. It recommended the adoption of a long-term strategy to meet this growth. It warned that the economic consequences of inaction would be dire, including a $6 billion loss in national GDP by 2035. New South Wales would be the hardest hit, with a loss of $2.3 billion in gross state product over the same period.

The 3,000-page comprehensive report made a range of recommendations and the key one was to support a second Sydney Airport. Sydney is full at peak hours now but the peak period is lengthening; pretty soon it will exist from between 7 am in the morning right through to 7 pm in the evening, with just a short period in between. This has an impact; because Sydney Airport is at peak for most of the day, a delay that occurs anywhere in the network takes longer and longer to get back into an on-time performance schedule. It is why, in terms of a response to this report, as transport minister I did everything possible to advance planning for a second Sydney Airport, including looking carefully at the options for the location of a second airport. It is also why, since a change of government in 2013, Labor has strongly supported the current government’s actions to progress the proposal. A second airport for Sydney did not just require government action; it also required opposition support to make it a reality. If not, the impasse that has existed for far too long would have continued.

I make it clear today that my constructive approach to these issues will continue. The truth about major infrastructure projects is that sometimes a decision by the government of the day is not enough to achieve what is required. When it comes to nation-building infrastructure I believe that this parliament has a responsibility to take decisions that will benefit this generation and future generations. It requires political parties to put aside politics and work together in the national interest. It is about our economy, our productivity and our ability to grow as a nation.

Handled properly, a second airport can provide opportunity—jobs for tens of thousands of people in Western Sydney. Airports are job generators. The joint study found that, in the absence of a second airport in Sydney, the total number of jobs that will not be created is estimated to grow over time as unmet demand increases. This is averaged to be 12,700 in New South Wales and 17,300 nationally over the period from 2011. In 2060 alone the annual estimate of forgone jobs is approximately 57,000 in New South Wales and 77,900 nationally. Further, the jobs around airports are well-paid jobs.

The Grattan Institute undertook detailed research across Australia’s capital cities last year looking at where the high-paying, high-productivity jobs are located. It found that CBDs were by far the largest centres of high-paying jobs. But it also noted that inner-city areas and secondary commercial hubs, such as those around large cities’ airports, also tend to be more productive than other locations. A new airport not only brings jobs; it has the potential over time to bring higher paying, productivity-driving jobs to a location other than a CBD.

Airports, like universities, are one of the key attractors of related industries to their precincts. The importance of this cannot be overstated at this stage of Australia’s economic development. As the 2013 State of Australian cities report—the last one that was actually published—made clear, our nation is undergoing a shift under which jobs growth is moving from the suburbs to the inner city. At the same time, housing remains affordable in suburban areas. This means that many Australians have to commute from homes in the outer suburbs to the inner city. This has given rise to the phenomenon of drive-in drive-out suburbs, where housing is affordable but jobs are scarce.

The social consequences of this trend are significant. It is indeed a tragedy that many Australian parents spend more time commuting in their cars than they spend at home playing with their children. There is also a risk that a lack of jobs close to where people live will entrench social disadvantage. One way that governments can address this trend is to invest in public transport. Regrettably, of course, the current government have cut public transport spending and do not believe in investing in it, although I note that they are very happy to come to openings of projects that have been funded by previous governments.

Another remedy is to focus on job creation closer to where people live. The construction of a second airport in Western Sydney will bring thousands of well-paid jobs to the region, not just in aviation but also in associated industries. A properly developed second Sydney airport will not only spark economic growth but also literally improve life for tens of thousands of people who will be able to live much closer to their workplaces. That means less time on the road, more time for family and friends and a better quality of life. The case for a second Sydney airport is therefore compelling, but, with the Commonwealth having chosen the site and already working on associated road infrastructure, it is important that we get the detailed planning right. We also need to ensure that the community has its say on the concept plan and that there is a proper and transparent analysis of environmental impacts.

Considerations like jobs and economic development, not to mention the meeting of economic need, do make the case for a second Sydney airport compelling. Still, there are those in parliament whose rigid ideology blinds them to the needs of a growing nation. I am somewhat disappointed, if not surprised, that the Greens political party in New South Wales have a formal policy that Sydney should not have a second airport. What is more, they also have a position that says they do not support Sydney’s first airport, Kingsford Smith—that is, the Greens political party argue that a global city such as Sydney should not have an aviation facility. It is an absurd proposition, in which people could get into Sydney by parachuting out of planes as they fly over, but it is unclear how they could actually leave Sydney. It is an absurd proposition that goes to their irresponsible behaviour in economic policy, where they are prepared to say to any particular group what that group wants to hear.

The truth is that nation-building infrastructure, including airports, is vital for our quality of life and our standard of living. Constituents in my electorate are adversely affected by Kingsford Smith airport, but I accept that that is a by-product of a piece of infrastructure that is vital for not just Sydney but New South Wales and Australia, as a generator of economic activity and jobs. The Greens political party, of course, say that you can have no airport in Sydney or in Western Sydney but a high-speed rail line to a mythical location somewhere else. The problem with that is, of course, that a high-speed rail line would include 67 kilometres of tunnel through Sydney, which the study that I commissioned as minister showed would also in practice be likely to be opposed by the Greens political party, just like the Greens in the UK opposed the high-speed rail proposals that had the support at the last election in Britain of the UK Conservatives, the Liberal Democrats and the Labour Party. The fact is that they should not be allowed to have this absurd proposition whereby in inner Sydney they argue that they want to close Kingsford Smith, but they also argue against any location for a second airport.

The Labor Party will adopt a constructive approach to this. We understand that construction of a major project like a new airport is difficult to handle politically. We also realise that the imperative for action requires us to work in a constructive way with the government, and I believe I have done that. I do think, though, that part of building that community confidence is making sure that the environmental protections are very much there, and that is why we very much welcome the strengthening that is in this legislation.

One problem with the existing Airports Act is that it was designed to deal with existing federally leased airports, including in our other capital cities. The bill before us seeks to address the development of an airport on a greenfield site. It brings two existing processes together to address the initial development of a brand-new airport: the development of a master plan, which is more strategic and conceptual in nature, and the initial major development plans, which are in effect development applications that require Commonwealth consent. After the initial development is complete, the new airport will revert to the regular five-year approval arrangements that exist for all other federally leased airports.

Labor welcomes the bill’s proposed strengthened role for the environment minister in making mandatory environmental conditions rather than, as is currently the case for other airports, making non-binding recommendations to the infrastructure and transport minister. Labor emphasises that the EIS process, which is being conducted under the Environment Protection and Biodiversity Conservation Act 1999, needs to be thorough, evidence based and transparent, with conditions that address environmental amenity as required.

We note that the minister has committed to allowing a full process of concurrent community input into both the airport plan and the EIS later this year. This is important. It is inevitable that not everyone will be pleased about the construction of a second Sydney airport. That is the nature of development. But it is essential that the community have its input, that community views are taken into account and that the government considers the community views in a responsible way.

The fact that this legislation is required now to address drafting issues highlights the inadequacy of the original legislation. For example, a condition on the sale of the Kingsford Smith airport was that the existing owner be given first right of refusal for the development of any second airport. In retrospect, it is clear that this condition included no additional revenue benefit for the Commonwealth and has reduced potential for competition in the sector. It is not a proposal that I believe is ideal.

This bill moves to emphasise that changed options for operation of the two Sydney airports continue to protect the lessee from exposure to the application of National Competition Law. It does so by exempting possible Sydney Airport Corporation Limited operation of both Kingsford Smith airport and the second airport from the ‘substantial lessening of competition’ rule in Competition Law.

We may well wonder what the ACCC would actually think about an arrangement for construction of a second airport that gives the inside running to the operator of the existing airport. There are competing views perhaps, but an open tender that included Sydney airport as an equal bidder would almost certainly have allowed more innovation, interest and, dare I say, sale proceeds to the Commonwealth than the closed process that begins in the first stage of this process.

We know that the ACCC is wary of the lack of regulation surrounding current port sales, as are many shippers and port lessees. At first glance, airports are not dissimilar. Sydney airport is one of four airports currently monitored by the ACCC in terms of service levels and prices.

The Howard government had a record of lazy privatisations. Look at the mess that followed the unreconstructed sale of Telstra, both the monopoly and contestable elements, with little regard to the consequences for Australian consumers and businesses. The coming into existence of the NBN was in part related to the legacy left to a future Labor government arising from that lazy sell-off process. The inclusion of the right of first refusal to the buyer of Kingsford Smith airport by the Howard government was done late in the process, and with little apparent regard to the interests of future users of airport facilities in Sydney.

This bill does not take away the contracted right of first refusal, but it clears the way for real contestability should Sydney airport not take up the government’s offer. It is important to recognise that Sydney airport has the right of first refusal, not the right of veto—as I continually put to the former chairman of the Sydney airport, the now departed Max Moore-Wilton; I made clear my views about the conflicts that occurred with Mr Moore-Wilton. Specifically, this is done by providing for the possibility of unrelated owners operating Kingsford Smith and the second airport.

At the moment, it is extraordinary: if you had someone other than Kingsford Smith airport operating the second Sydney airport in terms of owning it then Kingsford Smith would still have to have the right to operate the second Sydney airport; therefore, completely vetoing in practice the ability of anyone other than Sydney airport to bid. That is just outrageous legislation that occurred. The former government that presided over that in 2002 should really stand condemned for the fact that this government is having to fix up that absurd proposition.

Of course, it also had in the legislation caps on cross-ownership of Sydney’s second airport by the owners of Melbourne, Brisbane and Perth airports. Under the existing legislation, not only did you have that Sydney’s second airport had to be operated by Kingsford Smith airport whether it owned it or not; you had ownership restrictions on what would be natural bidders for a second Sydney airport—that is, airports in other capital cities that are well run and with the experience of operating airports. This legislation fixes that up. It improves the negotiating position of the Commonwealth with the Sydney Airport Corporation, implementing what common sense tells you should have been the case from the very beginning.

While the opposition will be supporting this legislation as a means to ensure that we get the planning right, I do want to raise the fact that the rail connection needs to be built just as the roads need to be built. It makes no sense to go back after an airport is built and a runway is in place to build a railway line.

As much as an airport is a piece of economic infrastructure, it is also a public asset. To facilitate its efficient use, it should be connected to the existing public transport network. A rail link that connects the existing south-west line—that has been extended thanks to the decision of the former Rees government in New South Wales—to the western line should be part of the initial development. That would ensure it was built into the price when the airport is leased as well.

This would mean benefit for the people of Western and south-western Sydney regardless of whether they are going to airport or not. That is an example of what can drive public support for this proposal. I think very strongly that this should occur. During the New South Wales election, I did a press conference with the New South Wales Labor leader Luke Foley to express our view there. I would urge the government to have a close look at the propositions that we have put forward in a constructive way and get on with ensuring that this occurs.

The fact is that no airport, without public transport access, operates as well as an airport once it has that public transport access. Look at Melbourne: decades after the new airport was opened, they still do not have rail access, and it is still an issue. It is far harder once the airport has been built to go back and deal with those issues.

In conclusion, one of the key responsibilities of elected office is to think about the future. One of the reasons I am attracted to the infrastructure portfolio is that you can make a difference, not for a year or a political term but for generations to come. Western Sydney has a population now of over two million people. Think of Adelaide not having any airport at all. That is a relevant factor here. This is about provision of infrastructure, provision of highly paid jobs and driving that economic reform.

After working in government to lay the groundwork for a decision about the second airport, Labor will continue to play a constructive role in making the project a reality, but in doing so we insist on proper process. I acknowledge the fact that the minister and Assistant Minister Briggs have been available for consultation and have ensured that this project has moved forward in a way that is above politics. That is necessary. We also need though to bring the public with the government on this proposition. That is why a proper assessment of the environmental impact, ensuring that there is value for public money in this process and ensuring that we maximise the job creation and the public benefit that can come out of a second airport are so important. I commend this bill to the House.