One of the disturbing things about Sydney’s much needed second airport at Badgerys Creek is the unwillingness of the major parties to do anything to break the monopoly pricing situation that would arise if it becomes owned by the same interests as the existing airport. Last week in the Senate Nick Xenophon, the independent Senator […]

One of the disturbing things about Sydney’s much needed second airport at Badgerys Creek is the unwillingness of the major parties to do anything to break the monopoly pricing situation that would arise if it becomes owned by the same interests as the existing airport.

Last week in the Senate Nick Xenophon, the independent Senator for South Australia, refused to be a part of that in no uncertain terms.

He not only spoke about the damage that would be done to the Sydney economy by having both of its major airports controlled by the same interests, but, under privilege, drew attention to claims that the owners of Sydney Airport have paid no tax on an enterprise which has not only abused its pricing power but delivered over $1 billion in ‘fees’ to advisers and financiers.

Given the benefits of privilege being applied to matters the opposition seems incapable of dealing with, and that the coalition government prefers not to address while trying to screw ordinary working people (or voters) . there is below in italics an extract from the Hansard of Senator Xeonphon’s ignored speech on the second reading of a bill to facilitate the new airport.

Sydney Airport Corporation has the right of first refusal to develop and manage the new airport. This option was part of the original privatisation deal that saw the airport sold for $5.6 billion by the Howard government in 2002. The privatisation of Sydney Airport, creating a monopoly out of our largest and oldest airport, has been a disaster for Sydney and the nation. Now we are considering a bill that makes arrangements to possibly extend that monopoly to the new airport, cementing high costs of services for the travelling public for decades to come. Many formally state owned enterprises have been privatised since the 1980s and sometimes not with a good result for the public—from the Commonwealth Bank to Telstra to electricity grids; and, in my home state of South Australia, the state government is crazily trying to privatise the Motor Accident Commission—but the privatisation of Sydney Airport has to take the cake as the craziest of all. It was not inevitable. The federal government did not have to privatise the airport and it did not have to include a first right of refusal for any second airport within 100 kilometres of Mascot, guaranteeing not only a monopoly now but a monopoly into the future if that is what the new owners want.

Back in 2002 it was thought to be a high price but, 13 years on, it is clear that Macquarie Bank got Australia’s largest and oldest airport for a bargain. But it has gained a reputation for providing overpriced low levels of service, as a private monopoly, for those who have to use the airport. Sydney Airport Corporation pretty much charged what it liked for its services, including to the airlines and the travelling public, via landing and car-parking fees. Mr Acting Deputy President Sterle, you know—through chairing regional and rural affairs and transport committee inquiries—that landing fees for Qantas, for Australian airlines, are exponentially higher than they are for comparable overseas airports. It is a rip-off.

The ACCC is on the record as being concerned at the privileged place Sydney Airport Corporation has in extending its monopoly. Each year the ACCC looks at the prices set by airports and has found Sydney Airport to have the most exorbitant parking rates of any airport in Australia. In fact, it is way up there on an international level. For example, it costs drivers $32 for three hours or $135 for seven days in the longer-term carpark. These charges have generated a revenue of $120 million in the last reporting year—up 4.9 per cent, in margin, on the previous year. Why do they do it? It is because they can get away with it, as a monopoly. They will do it again at Badgerys Creek if they decide to take up the option to develop, which I suspect they will.

The issue of landing and parking fees for airlines has also been a sore point in Sydney. No one could accuse me of being mates with Qantas CEO Alan Joyce—and he cannot do anything about this; I even got a lawyer’s letter from him over something I said about him, but we sorted that one out—but he is on the record as saying that Australian airports could charge fees for oxygen if they could and that Sydney Airport had amongst the highest charges. On this issue, I agree with Mr Joyce in his advocacy. He is absolutely right. He is speaking not just for his company but for all Australian airlines that want a fair go and for consumers who are being ripped off.

It does not end there. Credible reports from Michael West and Fairfax Media show that Sydney Airport Corporation pays little or no tax to the federal government. According to Mr West—a very experienced business journalist—Sydney Airport did not pay any tax in its first 10 years but has delivered more than $1 billion in fees to advisers and financiers. Because it is a monopoly, it can afford to carry huge debts and it claims interest on that debt as a tax deduction. That effectively cancels out any profits. The real profits are soaked up in hundreds of millions of dollars in fees to its bankers and financiers, each year. It is a nice little earner.

This monopoly privatised corporate entity generates about $700 million in financing costs soaked up on Macquarie Bank clients, bankers, advisers and security holders. To quote Rupert Murdoch, ‘A monopoly is a terrible thing unless you happen to own one.’ No wonder the ACCC has openly questioned why Sydney Airport received a first right of refusal to operate a second Sydney airport. In its 2013 airport updates the ACCC said that separate owners of the two Sydney airports would encourage lower prices and increase capacity and quality for customers. But that is not to be. The ACCC report said:

Unfortunately, in this case short term budgetary considerations have served to undermine the competitive framework that delivers improved services and lower prices within a market economy.

Who will pay, in the long run, for this undermining of competition? It will be the people of Australia, particularly the hapless passengers who have to travel through Sydney Airport and get ripped off, day in and day out. Those who must travel through its airport include many from my home state of South Australia who catch connecting flights, particularly to the United States and across the Pacific.

It has not been that long since the privatisation—just 13 years. In that time Sydney Airport has had three CEOs, but its first, Max Moore-Wilton, is now the chair of Sydney Airport Holdings, which owns 84 per cent of Sydney Airport. He has come a long way since those days, before the privatisation, when he was secretary of the Department of Prime Minister and Cabinet. He left to take up the helm of Sydney Airport Corporation just months later. He now has the unprecedented opportunity to create a privately owned multisite airport monopoly in Sydney.

Sydney Airport might not be the only private company that charges like a wounded bull and structures itself to pay as little tax as possible, but it is Australian and was created by our federal government. The privatisation of Sydney Airport has been a disaster, and that disaster is set to continue if Sydney Airport Corporation decides to take up its option to develop and operate Sydney’s second airport. We will rue the day, if that happens.

A countervailing view was given by coalition Senator David Fawcett, which can be seen on YouTube here.

Senator Fawcett’s point that the owners of Sydney Airport and other major gateway airports that were privatised by the Howard government have in fact invested well in improving the passenger experience is a reasonable one, unless you are an airline shareholder or a passenger who pays for his or her own parking. Which on reflection, might seem like a lot of voters too.

He also made some critical observations as to how private or local government ownership of regional airports isn’t working as hoped for, leaving many of them struggling to raised the funds to provide essential aviation services including fire fighting at various locations.

We might conclude from this that he is not in favor of a hard nosed approach that could be summarised as ‘Let them burn.’ The issue of upkeep and safety at regional airports is unlikely to ever capture political will in this country until there is a very ugly incident, when their will be a stampede of concerned platitudes from hypocrites on both sides of parliament.

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