Categories
Local News - Victoria

Why it took 50 years for an airport rail link to get off the ground


Broken election promises, fruitless feasibility studies and vested interests have stalled the project, making it a common gripe for many Melburnians. Sydney and Brisbane have one, the complaint goes, so why don’t we?

The answer to this question should soon change. After months of negotiations, lobbying and the odd disagreement, the state and federal governments are on the cusp of announcing their preferred design for airport rail. Each are offering to spend $5 billion on the project.

Sources familiar with negotiations expect the governments to back a new, above-ground line between the airport and Sunshine, 12km west of the CBD. Trains would then run along existing tracks to the city via the new Metro Tunnel. This option would kill off a proposal from superannuation giant IFM Investors to build, fund and operate a $7 billion tunnel between the city and Sunshine, allowing fast express airport services on dedicated tracks.

The politicians might be opting for a cheaper build, but they’re coming closer than their predecessors to sending a train to Tulla.

A question of timing

With so few flights leaving the tarmac at Tullamarine because of coronavirus restrictions, some may question whether a multibillion-dollar airport rail link stacks up.

Total travellers at the airport were 97 per cent fewer in April compared with 2019, prompting S&P Global Ratings to downgrade the airport’s credit rating, citing reduced cash flows and increased debt.

Travel numbers are not expected to return to pre-COVID-19 levels until 2024 but Melbourne Airport’s landside access chief Lorie Argus says the rail link is still needed.

“We’ve seen global shocks to the industry before,” Argus says. “We want to build capacity ahead of the demand.”

Fifty years of waiting for a rail link to the airport have locked taxpayers into a far more expensive project than would have been possible decades ago.

A swag of Victorian premiers have investigated getting it built: Sir Henry Bolte in the ’60s, John Cain jnr in the ’80s, Joan Kirner and Jeff Kennett in the ’90s and Steve Bracks, Ted Baillieu and Denis Napthine over the past two decades. They commissioned numerous taxpayer-funded feasibility studies on the project, but to no avail. In the ’90s, the project involved extending the Broadmeadows line by five kilometres to the airport. That’s no longer feasible because of development in the west and reduced rail capacity.

“We talk about spending $5 billion now, that’s 10 times what was being discussed 30 years ago,” Public Transport Users Association spokesman Tony Morton says.

Politicians say airport rail has long been popular among voters. So why the delay?

The long take-off

Kennett, a long-time proponent of airport rail, says the reason for the project’s delay is simple.

“Other pieces of infrastructure had higher priority and were simpler to deliver,” the former Liberal premier says. “It’s a lot of money for a fairly short piece of infrastructure.”

Initial 1963 drawings of a proposed underground train station at Melbourne Airport's international terminal.

Initial 1963 drawings of a proposed underground train station at Melbourne Airport’s international terminal. Credit:CAHS/Airservices/CASA

Victoria has explored the likes of a French-built monorail and Dutch-inspired fast tram but time and demand hasn’t justified the expenditure, especially in the face of a high-performing SkyBus service.

Bracks won the 1999 election promising airport rail as Sydney and Brisbane were setting out to build their own. He envisioned a public-private partnership model, as did fellow Labor premier Kirner.

“Internationally, most places had this and it was a gap we could easily fill,” Bracks says. “There were certainly vested interests lobbying against our proposal” he says, referring to the taxi industry and the airport’s operators who were seeking to protect substantial car parking revenue.

Almost empty parking bays at Tullamarine Airport during the coronavirus lockdown.

Almost empty parking bays at Tullamarine Airport during the coronavirus lockdown.Credit:Getty Images

More pressing though, Bracks says, was a clause that Kennett locked into the CityLink contract blocking a public transport link. But ultimately, it was the collapse of Australian airline Ansett – reducing the high number of airport workers set to use the link – that put the project “on hold”.

“Ansett was key,” Bracks says. “I was very disappointed it couldn’t go ahead.”

Virgin rose to become a major airline that was competitive with Qantas after Ansett’s demise.

Lyndsay Neilson, a former state infrastructure department secretary who oversaw a study into the project under Bracks, recommended a boost to SkyBus over rail. “Suburban rail has in itself fallen so far behind that investing in airport rail was considered a luxury,””he says.

But bureaucrats underestimated the airport’s growth: “Nobody anticipated the extent to which China would open up as a source of international tourism,” Neilson says.

Follow the leader

Prime minister Malcolm Turnbull beamed as he announced on a windy morning at Tullamarine in 2018 that he would build airport rail.

He promised $5 billion – beating Premier Daniel Andrews to the punch. Turnbull was a technocrat known to get hooked on the finer details of infrastructure. His announcement was paving the way for the type of big, city-shaping construction projects he hoped would become his legacy.

It caught Andrews off guard, forcing the state to match the funding promise. Andrews had iced Denis Napthine’s airport rail plans in 2014 to pursue level crossing removals and the Metro Tunnel.

“Services that people use every single day are my priority,” Andrews said at the time. But towards the end of his first term, he put airport rail back in the spotlight, promising it would be built within a decade.

“The Commonwealth was pushing hard to get airport rail on the agenda,” said Mike Mrdak, who was secretary of the federal infrastructure department at the time.

In 2019, Andrews outlined his vision for airport rail. It would probably involve a tunnel from the city and Sunshine and not stop at suburban stations. The project would be a boon for the regions, including Geelong and Ballarat, he said.

As if on cue, an IFM Investors-led private consortium proposed to build a $7 billion tunnel, allowing 20-minute journeys running 24/7, that would service regional fast rail. It seemed like a done deal but the state went cool on the proposal, preferring a cheaper, above-ground route that put it at loggerheads with the federal government.

Prime Minister Scott Morrison and Premier Daniel Andrews speaking to media about the airport rail link at Sunshine station in April, 2019.

Prime Minister Scott Morrison and Premier Daniel Andrews speaking to media about the airport rail link at Sunshine station in April, 2019. Credit:Stefan Postles

Canberra wanted to keep costs down while building an express, high-speed service that was competitive with SkyBus.

Torn between Victoria and behind-the-scenes lobbying by IFM and regional Coalition MPs, including Victorian senator Sarah Henderson, Education Minister Dan Tehan and, more recently, Nationals MP Damian Drum, Prime Minister Scott Morrison decided he would not go to war with Victoria on airport rail.

The airport rail link is important to Coalition MPs keen to score points on infrastructure. They want a tunnel to secure fast trains to their regional seats, with Henderson calling for “high speed dual track rail tunnel” to deliver 32-minute services to Geelong as she fights to win back her marginal seat of Corangamite. Drum says the north-east rail line, which run through his seat of Nicholls, is the state’s “worst performing” and that he wants faster services to Bendigo, Shepparton and Albury–Wodonga.

Fifty years after the airport opened there could be an alternative way of getting there.

Fifty years after the airport opened there could be an alternative way of getting there.

But Morrison is determined to build infrastructure with Andrews, sensing it is a winning formula with voters. If federally-funded projects build car parks at train stations in Victorian Liberal seats are to go ahead, the Victorian Premier has the keys.

Party Matters

Arun Chandu, who has written a PhD on the airport, says a rail link has traditionally been pushed by the Liberal Party. “Andrews is the first Labor person to start talking about a railway line seriously,” Chandu says.

Kennett rejects this idea, saying support for the project isn’t a “Liberal or Labor thing”.

Former premier, Ted Baillieu.

Former premier, Ted Baillieu.Credit: Chris Hopkins

But Kosmos Samaras, a key Labor election strategist from 2006-2020, disagrees. “It’s always been the Liberals’ flagship because the business community has generally always asked for it.”

The economic argument for an airport rail link falls flat without providing additional stops to stimulate the western suburbs, says Samaras. The question of whether the train runs express to the airport can be viewed through the prism of traditional Labor values.

Loading

In 1965, Labor joined the Country Party to stop Bolte’s express airport route in favour of a suburban service stopping at Keilor East, Avondale Heights and Airport West. Former Labor member for Broadmeadows John Wilton accused Bolte of building a “glamour project” for a “selected few who travel by air”.

Treasurer Tim Pallas has signalled airport trains may stop at suburban stations to boost sluggish patronage, despite Andrews previously ruling this out. This option would also use existing tracks between the city and Sunshine, which risks clogging any spare capacity for extra trains to the west.

A suburban service is at odds with what is being proposed by the IFM-led consortium made up of Melbourne Airport, Metro Trains Australia and Southern Cross Station. IFM is fiercely pursuing an investment trifecta: a rail link connecting its two assets, the airport and Southern Cross Station.

The consortium insists they want a low return on revenue, that tunnel access charges will be modest and they will absorb the construction risk.

To Kennett, turning down IFM’s $7 billion is reckless. As licensees of the airports, the superannuation funds “should be investing in the provisions of the infrastructure,” he says. “And who better to own it than hundreds of thousands of Australians.”

But RMIT professor of urban policy Jago Dodson cautions against allowing the private sector to run airport rail.

“Private companies don’t get into building infrastructure for virtuous public purposes, they build it because they see a profit,” he says.

The airport link should be part of the suburban service accessible with a myki, with the cost on par with a regular zone 2 service and not be “fragmented out into separate rail systems,” Dodson says.

Baillieu, who promised rail links to Avalon and Tullamarine when he was premier, says that, express airport services on dedicated tracks are more costly, but without a dedicated line, “you’ll probably stay in a cab”.

“Commuters will judge this very quickly and very harshly,” he warned. “It will be judged on frequency, speed and cost to them – not to the taxpayer – and what happens at each end. That’ll be it.”

Get our Morning & Evening Edition newsletters

The most important news, analysis and insights delivered to your inbox at the start and end of each day. Sign up here.

Most Viewed in National

Loading



Source link

Categories
Australian News

Cop forces Aboriginal teen to the ground


NSW Police has responded to footage of an Aboriginal teenager being hurled to the ground by an officer in Sydney.

The footage appeared on social media as racial tensions rise around the world and Black Lives Matter gear up for a major Australian protest.

In a statement released today, NSW Police alleges the teen threatened the officer.

The video posted on Facebook overnight shows a small group of teenagers on the streets of Surry Hills having an argument with a police officer at around 5pm.

The teenagers accuse the officer of swearing at them.

The officer can be heard denying this.

“I didn’t say that at all mate, you need to open up your ears,” the officer says.

One of the teens responds: “I heard you from over here. I don’t need to open up my ears.”

“You do because I did not say that,” the officer says.

The teenager then responds, saying: “I’ll crack your f***ing jaw, bro.”

The officer then asks, “What was that?”

He begins walking quickly towards the teen saying turn around, put your arms behind your back and get on the ground.

The officer turns the teen around, pulls his arms behind his back and uses his leg to sweep him onto the ground.

As the boy lies on the ground he can be heard making a high-pitched squeal. The boy’s mates can be heard yelling, with one saying, “You just slammed him on his face.”

NSW Police says that police were patrolling a park at the time when they spoke to a group of teenagers.

“It’s alleged a 17-year-old boy from the group threatened an officer, before being arrested and taken to Surry Hills Police Station,” a spokewoman said.

“He was subsequently taken to St Vincent’s Hospital for observation before being released into the custody of family pending further inquiries.”

An investigation into the circumstances surrounding the arrest is now underway by officers attached to the Professional Standards Command.

The constable involved has been placed on restricted duties while this review is carried out.

A family member of the boy took to social media overnight, claiming the police had arrested the teen “for no reason at all”.

“This is so wrong on so many levels,” the family member said. “I am that pissed off with what has happened.

“(He) was with friends in a park not even 100m from his home in Surry Hills, doing nothing just being boys hanging out with each other when police arrest him for no reason at all.”

The family member said the boy had been taken to St Vincent’s Hospital with multiple injuries.

The incident comes as fears of violent clashes at a major Black Lives Matter protest in Sydney have forced its cancellation.

The rally, which would have had people march through Sydney’s CBD on Tuesday evening, was cancelled due to concerns over the safety of attendees.

“We have had some people intending to wreak havoc and protest against the event,” an organiser posted to Facebook on Monday.

“This event was meant to be a time for Aboriginal voices to be heard but, due to uncertainty of safety for all involved, we would like to (advise) cancellation of the protest.

“Safety is always a priority and it breaks the hearts of everyone involved to have to cancel this event.”

The organisers, Fighting In Solidarity Towards Treaties, redirected people to a Sydney vigil for Mr Floyd at Railway Square at 3pm on Saturday.

The Australian Communist Party later said it would organise a replacement event for Tuesday at 5pm in Hyde Park.

Some 4500 people have indicated via social media they will rally on the steps of Victorian parliament in Melbourne from 2pm on Saturday.

Another 2000 say they will be in Brisbane’s King George Square from 1pm that day.

The organiser of both rallies – Aboriginal nationalism youth group Warriors of the Aboriginal Resistance – will call for an end to black deaths in custody and will express solidarity for Mr Floyd and “the Minneapolis freedom fighters”. “BLACK LIVES MATTER!” the group posted.

Nationwide protests began yesterday as hundreds of people packed into Perth’s CBD to liken police brutality in the United States to Aboriginal deaths in custody.

The protesters held signs that read “We can’t breathe” and “400 plus deaths in custody”, and made reference to George Floyd, a black man whose death at the hands of police sparked widespread protests across the US.

With AAP



Source link

Categories
Business

The week that Virgin Australia hit the ground hard


Australia’s second airline went into voluntary administration on Monday, a move that adds to the uncertainty for its 10,000 employees, many of whom have been stood down during the coronavirus pandemic, and could change the face of aviation in this country. The government’s decision to let Virgin slide into administration has set off a multibillion-dollar race for control of the airline involving some of the nation’s most powerful dealmakers and deepest-pocketed investors. It has already pitted state governments against each other.

Loading

BGH Capital, the private equity firm led by well-connected dealmakers Ben Gray and Robin Bishop is the highest-profile investment firm in the race. Transport billionaire and airport owner Linsday Fox is also eyeing the airline, along with various international investors.

Yet while many potential buyers are circling Virgin, the government’s decision is not without political risk. Administration, a mechanism designed to allow a company to survive while also clawing back money for lenders, can be messy, as other high-profile corporate implosions such as Network Ten show.

The appointment of former Macquarie chief Nicholas Moore as an emissary for Morrison in the proceedings suggests the government is well aware of this and that it may end up being the buyer of last resort anyway.

Morrison had repeatedly signalled in recent weeks that there would be no Virgin bailout. The government did not want to set a precedent that would prompt other challenged companies to seek assistance. Nor did it like the politics of being seen to support Virgin’s foreign shareholders, which include aviation giants Etihad, Singapore Airlines and China’s HNA.

But the Prime Minister’s announcement on Thursday still came as a shock to those at Virgin who had been hanging on to hopes of support. A clip of the comment was quickly sent around to Scurrah and other senior managers, sparking a flurry of messages and phone calls.

Virgin’s management, board and bankers been working feverishly to restructure the group, weighed down with $6.8 billion in debt, so it could survive the coronavirus pandemic.

Sources close to the survival project run by investment banks Houlihan Lokey and UBS and reporting to chairman Elizabeth Bryan say Virgin had attracted nine different parties who were looking at deals to keep the airline alive. However all of the proposals hinged on some level of government support.

Scurrah, in the job for only 13 months, first wrote to Morrison on March 26 asking him for “urgent support” in the form of a $1.4 billion loan facility. Knocked back, the long-time transport and logistics executive returned with eight further proposals, the final one being for just $200 million he was convinced would buy Virgin enough time to finalise a solvent restructuring deal.

Some observers believe Team Virgin should have realised its proposals were going nowhere. “If you tell even a small child they can’t have any chocolate seven times you have to question their intelligence when they come back again,” said one senior banker. Still, despite the government signalling early on it would not provide financial support to specific companies, the Virgin camp believed there were encouraging signs and held out hope.

Loading

But the switch in rhetoric from considering “all options” to ensure Australia retained two airlines (albeit with an assurance taxpayers would not “bail out” Virgin’s foreign owners), to there being a “commercial solution” signalled that was over.

Sources who requested anonymity to discuss confidential matters said that in later talks, Morrison’s office encouraged Virgin to talk to BGH. There is also a view within the Virgin camp that BGH’s interest gave the government confidence it did not need to come to its assistance.

“BGH came to Virgin through the government,” said one source with knowledge of the events. “They’re very close to the government and were very clear and aggressive and saying: ‘you don’t need to do anything, we’ll pick it up’.”

The firm had sniffed around Virgin weeks earlier and had spoken to key figures at the airline including Scurrah and Bryan. But the two camps were at loggerheads about how the deal would be structured financially. One critic of Virgin, speaking on condition of anonymity, says the airline should have engaged more enthusiastically with BGH and other private suitors earlier. “People were told to structure bids in a way that assumed [Virgin’s] balance sheet was OK when it clearly wasn’t,” he said. “The company is losing hundreds of millions of dollars.”

Others question the view BGH had any influence over the government’s decision and describe Virgin’s reaction as “sour grapes”. They argue there was no chance Morrison would open the floodgates to other bailouts by helping the airline. They also point out the only party that clearly put pressure on the government was rival Qantas, whose chief executive Alan Joyce has said Virgin should not be rewarded for years of mismanagement. Qantas had also asked the government to proportionally match any support it gave Virgin to “even the playing field”.

Loading

At 2.15am on Sunday morning BGH signed confidentiality agreements with Virgin, giving the buyout firm access to its data room to inspect its books. BGH has $2.6 billion in it coffers and is working with heavy-hitting Melbourne lawyer Leon Zwier and outgoing PwC boss Luke Sayers. It is also backed by the nation’s largest super fund, AustralianSuper, which manages $180 billion in retirement savings and is linked to the trade union movement. Former ACTU director Dave Oliver is a director.

The BGH consortium is one of 11 groups Virgin’s administrators say are interested in buying and relaunching the airline. Deloitte partner and Virgin administrator Vaughan Strawbridge hopes to find a new owner within three months.

Buyout firms Bain Capital, Apollo and Oaktree are also said to be interested. So is US airline investor Indigo Partners, which owns a number of budget airlines across the Americas and Europe, including Frontier Airlines and Wizz Air, and which Virgin has approached in the past about becoming an investor, according to a source with knowledge of those conversations.

Loading

State governments could also play a role in determining Virgin’s future, with Queensland putting $200 million on the table and declaring it will “stop at nothing” to keep the airline in Brisbane, and NSW and Victoria expressing an interest in luring it south. Linsday Fox, who is close to Sayers, discussed a plan to bring Virgin to his privately-owned Avalon airport with Victorian Premier Daniel Andrews.

Virgin first opened its data room three weeks ago so its major shareholders could consider recapitalising the business. The only one who came close was co-founder and 10 per cent shareholder Richard Branson. Observers note he had the most to lose from Virgin’s collapse: the licence fees he gets for the Virgin brand, suggested to be worth around $15 million to $25 million a year.

At a board meeting on Monday, Virgin’s directors made the unenviable decision to appoint Deloitte as administrators. That firm was chosen a little over two weeks earlier at another meeting where there was mild disagreement about which group was best to advise the ailing airline.

Sources aware of the selection process said the board of Virgin favoured KordaMentha, given its success with administrations with large unionised workforces, while Scurrah favoured PriceWaterhouseCoopers. Unable to make a decision, they threw to CFO Keith Neate, who went for Deloitte.

Many in the Virgin camp are riled by the Morrison government’s mantra that it did not want to bail out Virgin’s foreign shareholders. They say every deal they put forward involved these shareholders being wiped out by an injection of new equity.

Their backs are also up over how much money the government has given to Regional Express Airlines, believing the mostly foreign-owned company chaired by former Nationals leader John Sharp has received the lion’s share of almost $300 million in assistance to the regional aviation industry.

“If Virgin had been given that and a government guarantee, it may well have been able to do a solvent restructuring,” said one figure close to the events.

Transport Minister and Deputy Prime Minister Michael McCormack’s assistance package of $715 million in waived fees and levies for Virgin and Qantas appears to have made little impact at a time when they are barely flying. Virgin sources said it received the first $4 million cash injection from the program on Friday.

Loading

At the same time, some investment banking sources (who declined to be named to maintain business relationships) were surprised that Virgin appeared to only be considering a rescue deal that included the government or administration and did not consider a debt-for-equity swap to rescue the company outside of administration, a mechanism used by Nine Entertainment and Slater & Gordon in the past. “I couldn’t even get them to return my call,” said one senior investment banker.

Many industry watchers now see administration as a chance for the loss-making Virgin to improve its business by ripping up bad contracts and shaking off unsustainable debts.

But forces at the opposite end of the political spectrum to the Morrison government could play a key role in determining whether that happens. Federal Labor and unions wanted the government to bail Virgin out to protect jobs and save the nation from a potential Qantas monopoly. Governments in America and across Europe have already extended billions of dollars in financial aid to their airlines as the pandemic forced them to ground operations.

The Australian Council of Trade Unions will arrange representation for Virgin’s 10,000 workers, who are owed $450 million in wages, leave and other entitlements. This could make them a decisive voting bloc when it comes to any rescue deal.

ACTU president Michele O’Neil said the peak union body would support deals that were in the best interests of workers – which meant saving as many jobs as possible in a relaunched airline. The unions would support “a buyer that has a viable plan for the long-term future for Virgin airlines, not a short term take-the-money-and-run proposal,” she said.

Meanwhile the holders of Virgin’s $1.8 billion of junk bonds are concerned they will be asked to take a much larger haircut on what they are owed than Virgin’s secured creditors – banks and aircraft lessors – and say they are “up for a fight”.

“This is not going to be as simple as everyone’s saying, and done and dusted in two or three weeks,” said one investment banker.

Most Viewed in Business

Loading



Source link