Fly to one airport, fund another
Ludicrous news coming out of the Daily Telegraph this morning, which suggests that passengers to Sydney’s only airport could be helping fund the building of its second.
The Turnbull government is allegedly considering a tax of up to $10 per passenger flitting in and out of Kingsford Smith Airport to fund construction of a second Sydney airport at Badgerys Creek.
Per the Telegraph, former treasurer Joe Hockey had proposed a $5 levy on passengers on all domestic flights in and out of the Mascot Airport and a $10 levy on international flights to raise the stack of billions needed to build the second airport.
Treasury had modelled the levy and legislation was in the process of being drafted before the leadership spill last month. The proposal is apparently headed to Cabinet real soon, and as reported by the Telegraph, Hockey had privately briefed the opposition on the proposal.
Now, the levy is obviously going to attract some complaints, because no one wants to foot the bill for one airport just because they happen to fly out of another, but Hockey seems to believe it’s the only way to “future-proof” the Badgerys Creek airport, whose construction is expected to begin next year.
Waiting for private capital investment will result in delays to this schedule, so now travellers might have to reach into their wallets to help the government out.
According to the Telegraph, Hockey, who revealed his plans for a tax in his parting speech on Wednesday, had also flagged the genius levy idea with the major airlines.
It is believed they objected but said if it had to done, it should apply nationally, not just Sydney, and apply to foreign carriers flying into Australia as well.
Qantas CEO Alan Joyce said the airline had long been a supporter of a second airport but was opposed to pre-funding construction through a levy.
“It simply doesn’t make sense when both the state government and Sydney Airport have access to very low rates (of interest) and bonds to fund infrastructure and other mechanisms,” Joyce said, per the Telegraph.
“Passengers already pay a number of taxes to fly into Sydney Airport — it’s actually one of most expensive airports globally to operate.”
Unlike the Ansett levy, which imposed a $10 tax for two years raising $225 million to cover worker entitlements, the Badgerys Creek tax would need to be racking up enough coin to just start construction – but how long will this continue for?
The earthmoving phase alone on the 1780 hectare is estimated to have a pretty price tag of $1.5 billion, and would involve the relocation of too many million cubic metres of soil and rock to count, just to make a level field for the runways.
The remainder of the cost would involve the construction of aviation infrastructure.
The total asking price for stage one — a single runway configuration operational by the mid-2020s — has been pitched close to $3 billion, per the Telegraph. So not cheap.
“As Treasurer I started work on this and had policy approval for a levy on traffic movements at Kingsford Smith Airport,” Hockey told Parliament.
“That locked in the funding for a fair dinkum Badgerys Creek airport and fast-tracked transport services to Western Sydney to match. But it will only truly happen if it is fully funded.”
The Turnbull government claims it is still in commercial negotiations with Sydney Airport owner Sydney Airports Corporation (SAC), which still has first right of refusal on owning and operating dear old Badgerys.
Per the Tele, there are critics who argue SAC makes large enough profits and has cheap enough access to capital to fund the second airport out of its own pocket, without the need for a levy taxing other passengers to Kingsford Smith.
A tax could also punish low-cost carriers.
Image: Twitter
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