Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I rise to speak on the Airports Amendment Bill 2015. It is a very rare circumstance that I get to follow the member for Grayndler and actually agree with the vast majority of what he said, especially the attack that the member for Grayndler made on his coalition partner, the Greens, and their hysterical plans or discussions on the Sydney airport issue.

I grew up in Peakhurst opposite the old tip at Gannons Park. We were right under the old east-west flight path. Every afternoon we would come home from school and sit and watch the aircraft roll in from the west over the top of our house on their way to land at Kingsford Smith. I remember my old Peakhurst high school economics teacher, Mr Simpson, saying when we had discussions about Sydney's second airport back in the 1970s that he thought that there would never be a decision about Sydney's second airport in our lifetime. We discussed back in the 1970s the difficulty of making a decision about where Sydney's second airport would be.

Of course there were studies and studies. There was the possibility of Bankstown and Holsworthy. There were various places mentioned for Sydney's second airport. It took the current Prime Minister, Tony Abbott, to have the courage to make that decision that is best not only for Sydney's future but for Western Sydney's future and the nation's future. He made the decision back on 15 April that Badgerys Creek would be the site of Sydney's second airport. But I say that this will not be Sydney's second airport; I say this will be the first airport for Sydney west. Western Sydney today is a large, economically powerful entity by itself. It deserves and needs its own airport. That is what Badgerys Creek will give us. It will be a major boost for the local economy. It will create thousands of jobs. It will be a catalyst for investment in education, science, research and aeronautical industries. This will be the catalyst that will kick off Western Sydney.

Already we are seeing roads under construction. We saw as part of the $3.6 billion Western Sydney Infrastructure Plan the Prime Minister break ground on Bringelly Road on 20 January this year. The construction of the Northern Road is expected to begin in late 2015. The construction of the new motorway connecting the M7 to the northern motorway is expected to commence in 2019. The $5 million upgrade of the Ross Street intersection at Glenbrook was added on 5 March this year, with planning for the project to begin this year.

These things are all very important, especially to increase our nation's tourism. Tourism is an area where we in this country have great future prospects. The recent ABS numbers show that there has been a four per cent increase on the previous year. We will see that increase continue. As China, India and other Asian countries become economically stronger more of their population will want to travel to Australia, so we need to make sure we have an efficient airport network so they can come to visit Sydney, especially Western Sydney.

There is one issue, and this is where I am in some agreeance with the member for Grayndler. It would have been far better if we had not sold Sydney (Kingsford Smith) Airport and had that clause providing Sydney Airport Corporation, the successful bidder, with the first right of refusal, but we need to remember those times. The previous coalition government may be criticised for that, but let us not forget that they had to pay back $96 billion worth of the previous Labor government's debt. As well as that $96 billion, they had a $54 billion interest bill that had to be paid. So it is very easy to criticise them here in 2015, but we know back then they had the onerous task of paying back the previous Labor government's debt, which they did so successfully.

I would like to see—and I think it would be best for Sydney, for Western Sydney and for our nation—Sydney west airport and Kingsford Smith airport owned by separate identities so that they are in vigorous competition with each other. That would be best for the nation. I can remember when Sydney Airport Corporation first took over Sydney airport going to the airport with a load of samples and getting a trolley, which you used to pay a few dollars for. I remember the charge was originally $1 or $2. Normally I would carry my bag and not worry about it, but when I walked up to the trolley I found they had put the cost up to $5. I can remember another time seeing in the arrival hall that some bright spark had decided it would be a good idea to charge the incoming passengers money to take a trolley to put their bag on. People coming off international flights were meant to have $5 in Australian currency. These are the issues we get if we do not have effective competition in this area. That is what this bill actually does. It helps address those issues.

Yes, Sydney Airport Corporation still has the first right of refusal to develop any second airport within 100 kilometres of Sydney's centre and the Airports Act currently prohibits the Commonwealth from taking either of the actions that we want to to enable another entity to take ownership of this airport in the event that the Sydney airport group decline to accept the offer. Section 18 of the Airports Act requires that the airport lessee companies of Sydney—which is Kingsford Smith—and the airport site declared to be Sydney West Airport, as it is referred to in the Airports Act, must be subsidiaries of the same company. This is the legacy provision from 1996 which I discussed previously. This bill removes the requirement of common ownership, providing the Commonwealth with the commercial flexibility to deal with third parties and to develop the airport itself. So we are sending a clear message to Sydney Airport's corporation that we in this government are very serious and that, if they do not accept the terms that are put together, we would like to see competition between those two airports.

In the time remaining, there are a couple of other issues involving airports and competition. Firstly, airports and competition show some of the complete inadequacies of our competition law that the recent Harper review failed to address. I am referring to the issue of price discrimination. While the US has the Robinson-Patman Anti-Price Discrimination Act, in the EU they have a thing called article 82, which also is an effective provision against anticompetitive price discrimination. Article 82(c) provides that abuse by a company with a dominant position may, in particular, consist of:

…applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage …

We have no such provisions in our competition laws. The Harper review makes no recommendations that we have such provisions in our competition laws.

I can give an example of how this can apply to airports and why it is very important. In July 2000, there was a decision by the European Commission called the Spanish airports decision. What happened in that case was that they found that the airports in Spain were operating what they called a discount structure, or charging smaller airlines a higher price. If you were an airline and you made one to 50 landings a month, you paid the rack price; if you made 51 to 100 landings, you got a nine per cent discount; with 101 to 150 landings per month, you got a 17 per cent discount; with 151 to 200 landings, you got a 26 per cent discount; and with more than 200 you got a 35 per cent discount. So, if you were a large airline operator with a lot of flights and a lot of planes, you were able to get a 35 per cent discount on your landing fees in airports in Spain against a smaller operator. This had the potential to destroy competition. It prevented new operators that were coming into the airline industry in Europe and landing in Spain from being able to compete on a level playing field. What the EU found was that that structure of charging those smaller competitors a higher price was anticompetitive, and they banned it. They said:

The existence of economies of scale, the aim of reducing air traffic noise or air congestion, for example, could be regarded as objective reasons—

for such discrimination.

However, in the case of landing and take-off services such economies of scale do not exist. The services provided do not depend on the individual owner of the aircraft or whether they are rendered to the first or the tenth aircraft of the same airline.

They found that the fact that an airport:

… has applied dissimilar conditions to its commercial customers for the provision of equivalent services, thereby placing some of them at a competitive disadvantage, constitutes an abuse of a dominant position within the meaning of … Article 82.

We have no such provisions in our competition laws, and that threatens effective competition in our airline industry.

The other issue I would like to talk about quickly is that I fear that we are making a terrible mistake involving the Moorebank Intermodal. By having an intermodal at Moorebank instead of at Badgerys Creek, we are losing one of our abilities to fund the railway line into Badgerys Creek. The member for Grayndler emphasised the importance of building that railway line, but our funding is not unlimited. By investing in Moorebank—by pouring Commonwealth money down the toilet in Moorebank—we are simply making it harder and harder. That money should have been put into the rail link to get it set up at Badgerys Creek.

That draws me to an article that I came across after reading an article by Nick Cater today. This article is called 'Policy and planning for large infrastructure projects: problems, causes, cures'. It is a World Bank working policy from December 2005, and it talks about the exact problem that we have with Badgerys Creek, the 'planning fallacy'. It says:

… a major problem in the planning of large infrastructure projects is the high level of misinformation about costs and benefits that decision makers face in deciding whether to build, and the high risks such misinformation generates.

This is exactly what we have at Moorebank. It goes on, and it cites examples of how forecasts for rail projects have failed. It does a study across different continents, and for rail transportation infrastructure projects it finds the cost overruns, averaged across more than 50 projects, are 44.7 per cent measured in prices. It finds not only that the cost is more than 40 per cent higher but that the actual passage of traffic is 51 per cent lower than predicted. We have seen this in Sydney with our planning debacles: the Cross City Tunnel and the Lane Cove Tunnel. We have seen this in Brisbane. The article goes on:

Again, this is what we are at risk of seeing at Moorebank. It goes on to ask why this is happening, and it says:

In the grip of the planning fallacy, planners and project promoters make decisions based on delusional optimism rather than on a rational weighting of gains, losses, and probabilities. They overestimate benefits and underestimate costs. They involuntarily spin scenarios of success and overlook the potential for mistakes and miscalculations.

That sums up the Moorebank Intermodal to a tee. It also gives a warning about how to overcome this. It says:

The key weapons in the war on … waste are accountability and critical questioning.

That is again the problem that we have with Moorebank. There is simply no answering of the critical questions. There are three completely failed premises: it takes trucks off the road, it reduces air pollution and it saves costs. Any critical analysis of those three premises shows that they are completely faulty. In the Moorebank Intermodal, we have another complete planning fallacy. This should be combined with the airport at Badgerys Creek.

We have had the warning also from Infrastructure New South Wales. They have warned that the case has not been proven for Sydney for intracity intermodals. They have said that Enfield is a test case. Enfield has already been delayed by two years. We would be far better off if, instead of keeping that money down the toilet in the Moorebank Intermodal, we invested it in getting the rail infrastructure into Badgerys Creek, which will be a fantastic development for Western Sydney. Having said that, this is a good bill and I commend it to the House.

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