What would a second Sydney airport cost?

To cut straight to the chase, the ‘correct’ answer is $15 billion. Or at least that’s the widely accepted estimate.

It’s cited in this 2010 story quoting the Chairman of Infrastructure Partnerships Australia, Mark Birrell; in this 2011 interview with former Deputy PM and rail enthusiast, Tim Fischer; and more recently in this submission by the Australian Airports Association to the Federal and NSW government’s Joint Study on Aviation Capacity in the Sydney Region.

But where the hell did this figure come from? How accurate and reliable is it? Was it estimated by a technically skilled and independent body?

Thanks to the diligent research of one of The Urbanist’s many smart readers, I can tell you that $15 billion figure first appeared in a 2010 report by industry lobby group, Infrastructure Partnerships Australia (IPA), titled A realistic pathway to very fast trains. This impressive-looking report says (p 48):

In 1999, the cost for the second Sydney airport was reported to be in the region of $6 billion to $8 billion. A more recent media article said the cost of building a second Sydney airport had inflated to $15 billion.

That “recent media article” appears to be the real source. But here’s the interesting bit – the report says it’s an article titled, Do The Numbers Support The Very Fast Train?, published by The Melbourne Urbanist, on 3 May 2010.

Now I was flabbergasted to read that because I know the said Melbourne Urbanist rather well – after all, I am he (or at least I was up until three weeks ago when I came across to Crikey and shortened my moniker to The Urbanist). I can therefore tell you with the utmost authority that The Melbourne Urbanist did not estimate the cost of a second Sydney airport to be $15 billion. In fact The Melbourne Urbanist never attempted to estimate the cost. Period.

This is what I actually said in that post on Very Fast Trains (VFTs, also known as HSR, for High Speed Rail) back on 3 May 2010:

The cost of a second Sydney airport at Badgery’s Creek was estimated at between $6 to 8 billion dollars in 1999.  Clearly the viability of a VFT will be greatly influenced by how much a new airport and associated transport links cost. If it were to cost around $15 billion and emit similar levels of GHG during construction then a VFT would be competitive on the assumptions I’ve made here.

Cleary, my figure of $15 Billion wasn’t an estimate of what it would cost to build a second airport; rather, it was an estimate of what it would need to cost in order to make high speed rail between Sydney and Melbourne viable. I was referring to the fact that the lower the cost of a second airport, the less likely it is the numbers would stack up for High Speed Rail.

The IPA report goes on in the very next sentence to say that “industry analysts have confirmed for Infrastructure Partnerships Australia that $15 billion is a reasonable estimate of the cost of building a second Sydney airport”. The reader who alerted me to this issue takes the view – and I’m inclined to agree – that this probably amounted to no more than a chat around the IPA office, or maybe a phone call or two. The giveaway is that the IPA references my article, but not the “industry analysts”.

So the $15 billion figure has no standing whatsoever and should be ignored. It sounds to me like it would probably be in the ball park (and that’s perhaps why no one’s questioned its provenance), but if so that would be entirely coincidental.

As to my estimate that a new airport would need to cost at least $15 billion to make HSR viable, that’s now out-dated. The Federal Government’s current study puts the cost of providing HSR between Sydney and Melbourne at around double my deliberately conservative estimate (which was a mere $30 billion). Hence the cost of a second Sydney airport will very likely need to be even higher to make HSR viable.

The broader issue here is that figures will be invented if none exist. That can sometimes be politically convenient, but the NSW and Federal governments would do a great service to public discussion if they were to put aside their nervousness and produce at least some broadbrush estimates to fill the evident vacuum.

You’ve got to wonder how many other public debates are underpinned by dodgy numbers. It would be easy to say the media should’ve uncovered this mistake, but that would be unreasonable – this is expert stuff that journalists can’t always be expected to be across. Governments and experts in the relevant field are the ones who should be asking the questions.