Government to build second Sydney airport

The federal government has confirmed it will build Sydney’s second airport after the Sydney Airport Group, owner of Kingsford Smith, announced on Tuesday it would not take up its right of first refusal to construct and operate the Badgerys Creek airport.

Sydney Airport Group chief executive Kerrie Mather said despite the opportunities the new airport would present, “the risks associated with the development and operation are considerable and endure for many decades, without commensurate returns for our investors”.

Next week’s budget will give details of the western Sydney project, which will be part of the budget’s major infrastructure focus.

The government has been paving the way for the airport project and its plan to inject funds into a Melbourne-to-Brisbane freight line by distinguishing between “good” and “bad” government debt. In broad terms, it says “good” debt is for investment that brings growth, while “bad” debt is borrowing for recurrent spending.

In a joint statement, Malcolm Turnbull and Urban Infrastructure Minister Paul Fletcher said the project was vitally important for western Sydney, Sydney, and the nation.

They said the airport would inject more than A$1.9 billion into the economy during the construction phrase. “It is expected to deliver 9000 new jobs to western Sydney by the 2030s, and 60,000 in the long term,” they said.

They said the government had been planning for either the acceptance or rejection by the Sydney Airport Group, and was “well positioned to move forward”.

Jennifer Westacott, chief executive of the Business Council of Australia, said often governments had to step in for the early stages of a nation-building project but that always should be a catalyst for private sector investment in the longer term.