The Turnbull government says it will build Sydney's $3 billion 2nd airport

An artist’s impression of Badgerys Creek airport at Stage 1. Source:

The federal government says it will build Sydney’s airport, expected to cost $3 billion, after the owners of the existing Kingsford Smith Airport turned down the rights to the project because it was too “risky”.

A week after treasurer Scott Morrison attempted to divide government borrowing into “good” and “bad” debt, putting infrastructure in the good category, prime minister Malcolm Turnbull said details on the 2nd airport at Badgerys Creek in western Sydney will be announced by the Treasurer in the Budget next week.

The government signed off on stage one of the project in December last year and construction is expected to begin within 12 months.

“It is a vitally important project for Western Sydney, for Sydney, and the nation, which is why the Coalition Government ended decades of indecision by committing to the project in 2014,” the PM said in a statement.

“We have been planning for either contingency – acceptance or rejection by Sydney Airport Group. We are well positioned to move forward.”

Stage 1 features a single 3.7km east-west runway, on the 1,800ha site. The $3 billion airport, which will operate without a curfew, unlike Kingsford Smith, which essentially closes between 11pm and 6am, is expected to open in the mid-2020s. It’s expected to cater for 5 million passengers annually when it opens and 10 million within five years.

Stage 1 at Badgery’s creek includes a single terminal for domestic and international flights, plus a separate cargo terminal.

While $3.6 billion is currently being spent to improve road access in the area, no rail line will be ready for when the airport opens.

A tunnel is earmarked as part of the plan for a future underground rail link, but it’s expected to take eight years to build and take 10 million passengers.

A second parallel runway is proposed for around 2050, amid forecasts that up to 80 million passengers – double the current use at Kingsford Smith – will pass through the airport every year.

Sydney’s main airport is expected to reach capacity by 2027.

But Sydney Airport’s CEO Kerrie Mather said today that the Badgerys Creek program came with considerable risks and mean decades with a return to investors.

Mather said turning down the project was “in the best interests of our investors who represent millions of Australians through their superannuation funds”.

Deputy PM and Nationals leader Barnaby Joyce said he expected Sydney Airport to “play us along as long as possible and then say no”.

When the Howard government privatised Kingsford Smith Airport 15 years ago, the terms of the sale included a right of first refusal to develop and operate a second major airport within 100km of Sydney’s CBD. Badgerys Creek is 41km west of Botany Bay.

The challenge for the government now is how to fund the project, with the details likely to be revealed in the federal budget next Tuesday.

The prime minister said the project “will become a catalyst for investment and industry in Western Sydney”, delivering 9,000 new jobs to the region by the early 2030s, and 60,000 in the long-term.

NOW WATCH: Briefing videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.