Parliamentary Committees

Public Works Committee: Kangaroo Island Airport Upgrade

Ms DIGANCE (Elder) (11:23): I move:

That the 548^th report of the committee, entitled Kangaroo Island Airport Upgrade, be noted.

Kangaroo Island is Australia's third largest island, located approximately 110 kilometres from Adelaide. It has a permanent population of over 4,500, but this grows exponentially, with 200,000 visitors annually. As you would be aware, the island is accessible by air, with at least twice daily service from Adelaide to Kingscote, and by sea, via ferry from Cape Jervis to Penneshaw.

Currently, the airport and runway are unable to accommodate larger interstate aircraft. The committee heard that there is a demand from the tourism sector for interstate flights direct to Kangaroo Island. There is a perception that Kangaroo Island is too difficult to get to, and for the time-poor travellers, the extra day of travelling can be a game-changer.

In addition, the current aircraft used by Regional Express, the island's only airline, are no longer being manufactured. At the end of their useful life, these aircraft will need to be replaced with an alternative. To ensure ongoing air service to the island, the current runway needs to be ready to accommodate whatever aircraft this might be. Following investigations into the viability of upgrading the airport and runway, a proposal was provided to the federal government.

In December 2015, $9 million was committed to the project from the National Stronger Regions Fund. Specifically, the works are to lengthen the runway by 700 metres, to a total length of approximately 2,100 metres. This will allow for code 3C regional jet aircraft, such as the Fokker 100 or the Embraer 170, which have a carrying capacity of 100 to 200 seats. Works will also include:

modifications to taxiway A and the apron to accommodate these larger code 3C aircraft;

a terminal extension and/or upgrade to cater for one Fokker 100 and Saab 340 aircraft arriving and departing simultaneously; and

planning provisions for the installation of security equipment and upgrades to meet the legal requirements for aircraft greater than 20 tonnes.

The upgrade to the airport and the lengthening and strengthening of the runway are estimated to cost $18 million exclusive of GST. The state government has committed the remaining $9 million to the project. Kangaroo Island Council informed the committee that, from the analysis that is been undertaken, current passenger numbers should increase by 25,000 to 30,000 per annum within three years. It is also anticipated that the gross regional product for Kangaroo Island will increase by 12 per cent to $29.8 million by 2021, with the creation of over 200 full-time equivalent jobs.

The expansion of the airport will support other private sector projects, either proposed, or due to be commenced. These included an 18-hole links-style golf course and accompanying accommodation, the new American River 200-bed resort and expansion of the existing hotel accommodation in Kingscote. Some of these projects are dependent on the expansion of the airport.

The committee did have some concerns regarding the project, including the governance and delivery of the project. We have been reassured by DPTI that they are part of the project control board responsible for making key decisions, including around the scope, budget and time frames, and that they are actively involved in delivering this project in collaboration with the Kangaroo Island council. The initial design plans and investigations for the works are already well underway, with construction due to commence later this year. It is anticipated that the works will be completed by late 2017.

As part of the upgrade, the runway will be strengthened and resealed. In order to undertake these works, the runway—the only one bitumised at the airport—will need to be closed for several weeks. At this early design stage, it is predicted to be February to March 2017. The committee has some concerns around this, both with the timing during peak tourist season and with regard to ongoing air access.

It is vital that an air service to the island remain in operation at all times, especially for those who may be travelling to receive medical treatment, and the committee did stress this. The committee was informed that discussions are being held with the current air service provider, Regional Express, regarding the use of an alternative runway during this period. If this is not possible, other contingency plans are being prepared to ensure ongoing air services.

The exact timing of the closure is yet to be confirmed. However, we were informed that the works for the resealing need to be undertaken in the warmer months. DPTI has agreed to review the construction process proposed, with the possibility of identifying alternative arrangements for construction that minimise the duration and/or timing. Given the number of concerns regarding this project, DPTI and the council have agreed to keep the committee informed of the project's progress on a regular basis regarding this and other matters. Witnesses from the department and the council presented to the committee at our meeting on 4 August.

This is a very interesting and exciting project and I wish the Kangaroo Island community every success. This project has the potential to grow the regional economy sustainably, not only from a tourist perspective but also through the agricultural sector. Direct flights to the east coast will also allow some fresh produce with short shelf life, such as abalone, to reach Melbourne and Sydney in a more timely manner and, potentially, increase market demand for the island's produce.

I would like to thank my fellow committee members for their time in considering and reviewing this interesting and important project, and we certainly spent a number of hours deliberating and hearing from witnesses on this project. I would like to name the members for Colton, Torrens, Finniss and Chaffey for their commitment to this project, and also the committee staff for the work that they have done. Given this, and pursuant to section 12C of the Parliamentary Committees Act 1991, the Public Works Committee reports to parliament that it recommends the proposed public works.

Mr PENGILLY (Finniss) (11:29): I support the project, as does the member for Chaffey. As indicated by the member for Elder, it was an extended hearing. We had many questions, particularly from me. Some of those questions remain unanswered. The member for Elder referred to my major concern during her comments; that is, the arrangements for the Rex service to continue during the necessary closure of the main runway are still unsatisfactory. My view is that, unfortunately, we were fed a certain amount of nonsense on that by the council.

I also refer to the Rex aircraft. Rex is the biggest regional airline in Australia. The member for Elder referred to the aircraft having a timetable before they are replaced. They are still buying these aircraft, they are still bringing the aircraft into Australia and they have a good 10 years at least of life left in them. They are an excellent aircraft and they fit well into the hub and spokes operation—the hub being Adelaide Airport and the spokes being the airports they go to.

My view, and I have expressed it there and I will express it again, is that the treatment of Rex by the council CEO, in particular, has been less than required. In fact, Rex were pushed to one side and ignored for a certain amount of time. I have taken steps, through the committee, to rectify that. I am now comfortable, given that Mr Don Hogben and Mr Jon Whelan are part of the project management board with the council CEO from Kangaroo Island, that now there is a bit more control over it.

The sum of $80 million is a considerable amount of taxpayers' money to go into this project. I welcome the expense of the project. I point out that it is 30 years since the last upgrade, which I think was opened by a former minister for transport, the Hon. Peter Morris, a federal minister. There is a plaque at the airport to that effect. Thirty years is a good while and the work will commence reasonably shortly, I hope—I am not quite sure, but we will get a report perhaps tomorrow or at the next meeting on just where things are at the moment.

I guess the impetus for this project, though, originally came from Kristina Roberts, who was the executive officer of the old KI Futures Authority. She was the one who kicked it along. Also, Phil Baker, a former manager of the airport at Adelaide, did a report, and this is where it gets a little bit devious. I had trouble getting hold of Mr Baker's report for some time until it fell off the proverbial truck and a copy was made available to me, which was gratefully received. However, Mr Baker's chief recommendation was that it makes no economic sense at this time to proceed with the airport upgrade. I think that is something that they tried to bury away, but you cannot bury these things away because eventually they come out.

I am quite keen to make sure that local contractors on the island get the majority of the work; indeed, we will wait to see what comes out of that. It is going to employ a few people during its construction. Of course, this project had a business plan that was put together for the federal authorities to consider, but I am far from convinced that that business plan stacks up. You can put anything down in words; however, in saying that, I know that there is a good deal of expectation by some local producers of various products that it will make available the opportunity to send their products interstate.

I refer to the small volume products because the main product of the island is meat—whether it be beef, lamb or mutton—and wool, and of course, to a much lesser extent, grains and cereals, oil seeds, etc. The egg producers have capacity to put product on planes, and there is one oyster producer and a large abalone farm, so they will take up the opportunity because it all hinges around regular flights to the Eastern States and beyond.

It was difficult to extract any sort of honest answer from the CEO in relation to who would be flying in or out. They kept talking about commercial-in-confidence, etc. That is fine, and I understand that, but my investigations have brought to my attention the fact that at that stage Virgin had not been contacted since 2012. Qantas, who flew in and out a few years ago, came and went. Who knows what they will do? There are various airlines around, but we will have to wait and see. I say again that I hope it is a success. It needs to be successful. The input of that amount of taxpayers' funds demands some degree of success.

I would add that of the other projects we have talked about only two at the moment are a sure thing on the island: one is the $18 million worth of taxpayers' money to fund the construction of the airport, which will happen; the other one is the approximately $5 million of taxpayers' money that has gone into the Flinders Chase walking trail. That is fine, and I am quite happy about that, do not get me wrong, but I point out that is for the government's own business enterprise. That is what it is for; it is not for the private sector.

The only way the private sector will benefit out of that is from people who go over to the island to go on this walking trail, who will catch either the ferry or, probably to a lesser extent, the air service. More than likely, they will take everything with them, as many people do, and they will walk the trail for four or five days and they will go back. So, it is for the government's own enterprise. I welcome it. It is going to be good. I think the opening is in October. I think the Premier is going over to open it, as he would—he needs to have some good news to talk about, the way he is going. The fact of the matter is that they are the only two projects that are certain at the moment.

The member for Elder talked about the American River project and the golf course. I was advised last week that the Deputy Premier has now advised KI Council by letter that the proposed ferry and marina at American River are no longer going ahead. I think that needs putting into perspective. Of course, if that does not happen, it will make it difficult to build the hotel, I would suggest. That is not to say that it will not happen, but we will wait and see what outcome there is. A lot of people have had their hopes built up over a variety of expenditure that is proposed for the island, and I say 'proposed'. We will wait and see what happens, but the airport is going to happen.

I also would like to thank the former member for Mayo, Jamie Briggs of blessed memory, who was involved in the project through his former role as member for Mayo. His input was no doubt valuable. He has gone on to do other things, as people do. As to the airport project, as the member for Elder indicated, we will be getting regular reports coming back to the committee. I will be following it quite closely, as I just want to make sure that it is done properly. I want to make sure that there is no funny business that happens. I want to make sure that what is promised happens.

As I said before, I have a lot of faith in Mr Hogben and Mr Whelan and a lot less faith in the council CEO. That said, the fact of the matter is that it is going to happen and $18 million is going to be spent. I look forward to the completion of the project. I do hope that future air services will pick up that the number of air travellers has reduced dramatically over the last few years. The cost is prohibitive. That is the problem with getting back and forward to the island, whether it be by plane or by ferry—the cost is prohibitive and high. It precludes a lot of people from going over there. My view is that we need to fix up the cost of the water crossing. It is not the ferry operator, but the water crossing that needs doing. I look forward to seeing this airport project being completed.

Mr WHETSTONE (Chaffey) (11:39): I, too, would like to speak about the Kangaroo Island airport upgrade, the 548^th report of the Public Works Committee. As a regular visitor to Kangaroo Island, pursuing two of my loves, which are fishing and diving, I think the airport upgrade, jointly funded by the state and federal governments, is an important project to boost the region. Not only will it be an economic boost, it is also about giving further accessibility.

I am hoping that this airport upgrade will give a capacity to put some competition into this space. As the member for Finniss rightly said, it is a very expensive exercise to make the journey over to Kangaroo Island. Obviously, the project includes the lengthening, strengthening and apron expansion, and the upgrade to the existing terminal located at Kingscote. The cost of $18 million is split fifty-fifty between the state and federal governments.

This upgrade will enable the airport to what I would consider feed the local economy with more demand for accommodation. Just as importantly, in my role as the shadow minister for investment and trade one of the more exciting prospects of this project is the potential for Kangaroo Island producers and exporters to be able to take advantage of what they do really well over there, which is produce pristine high-end products. Obviously, seafood, honey and the agricultural-based products will be the beneficiaries.

Likewise, the upgrade will encourage tourism. That will give the island access from the eastern seaboard and, I believe, Western Australia too, on top of the 200,000 visitors who already visit the island. It is predicted that the 25,000 to 30,000 new visitors per annum who will visit the island within three years of operation will inject a vital stimulus into the local economy, because we have noted that there has been a continual decline in visitor numbers. I think that is not because people are not wanting to go to Kangaroo Island, just that the accessibility and the cost have been barriers.

I note the member for Finniss raised concerns about some potential options for planes to use other runways during construction. Again, those talks are still underway and we will hear more about that from council and the existing airline, Rex, that uses airport. In conclusion, I support the project. I think it will be a valuable piece of infrastructure for the island ongoing, and I think Kangaroo Island's economy will be one of the main beneficiaries of the upgrade.

Ms DIGANCE (Elder) (11:43): I would like to thank both the member for Chaffey and the member for Finniss for their contributions. This certainly is a project of great significance and complexity, which the Public Works Committee did spend a lot of time deliberating over and hearing evidence about. We certainly will be watching this closely with a lot of interest. We look forward to our regular updates based on the reassurance of the governance and transparent structure that has now been put in place. With that, I recommend the report.

Motion carried.