Aviation and Airports

CHAIR—Senator Adams would like to ask some questions—if the appropriate person is at the table—
about Jandakot. This is the story about how you can do a deal with the government to swap something worth
$20 million, which might be worth $300 million developed, for something worth $3 billion, is it not? Is that
the gist of it? I look forward to the answers.

Senator ADAMS—My question, firstly, relates to the sale of Jandakot Airport to—

CHAIR—The South African head company, is it not?

Senator ADAMS—That is correct. It is Ascot Holdings. Firstly, in terms of the sale of the airport, the first
thing that the people with their commercial premises at Jandakot Airport knew about this was through the
media. That has been of great concern. Secondly, in terms of safety, Jandakot airspace was unsafe as a result of
its proximity to Perth; the arrival of the new superjumbo Airbus 380 at Perth Airport would require the closure
of Jandakot Airport; the airport was already approaching its movement limit and would exceed the available
capacity in the short term, and there was no means of expansion to meet the expected demand. My first
question is about the safety aspect. Is that true or not true?

Mr Mrdak—You are quite right. The first that a number of tenants at Jandakot Airport heard of this
proposal was in the West Australian media or the national media. There were some meetings earlier in the year,
around May, when the new owners of the new airport met with the then minister and outlined a concept that
they wished to explore. The advice from the minister at that stage was very clear: the Australian government
had not formed a view. But the minister stressed to them the importance of the owners talking to the tenants at
the airport to ascertain their views and consult them about any concept that would involve a new airport and
the relocation of the existing facilities. Among the issues raised by the owners of the airport with the
government at that time were issues about the potential future constraints on the airport site. As you would be
aware, Jandakot Airport had a master plan approved recently, which included a future proposal to develop a
fourth runway, which enabled it to overcome some of the infrastructure constraints, particularly in cross-wind
conditions.
The owners of the airport have cited potential issues, given its location to Perth Airport, with future
expansion. As you would be aware, there is a ceiling on training circuits at Jandakot owing to the way it
interacts with Perth airspace. The question for the government is whether that ceiling and the current flying
training operations are an impediment to future growth of the airport. That has been a proposal put to the
government by the owners of the airport. We expressly asked that they discuss that with their tenants and, in
addition, to ascertain their views about what sorts of constraints Perth imposed on future flying training and
other commercial operations at Jandakot. We are also seeking advice from Airservices Australia, which
operates air traffic control services, and also the Civil Aviation Safety Authority. But to date the advice quite
Monday, 30 October 2006 Senate RRA&T 55
RURAL AND REGIONAL AFFAIRS AND TRANSPORT
clearly from the Air Traffic Control Agency and the safety regulator is that Perth and Jandakot can continue, as
they are, to operate together. Obviously, the boundary of the Jandakot circuit training area does lie underneath
one of the approach paths to Perth Airport, but the advice thus far from the air traffic control provider and the
air safety regulator is that that can continue and not be an impediment in the future to Jandakot.

Senator ADAMS—In terms of the company that has purchased the airport, under the plan is it able to go
into any other business other than running an airport on airport land?

Mr Mrdak—The primary purpose under the lease is to operate an airport. The Airports Act does provide
for activities on the airport site that are compatible with the operation of an airport. Therefore, as you have
seen right around Australia with the development of airports, a range of activities is now taking place on
airport land that are compatible with continuing and expanding the operations of an airport. Provided the
activities are not prohibited by virtue of the act and the regulations and it is not inconsistent with the
development and continuing operation of an airport, they are permitted to undertake other commercial
activities on the site.

Senator ADAMS—Under that plan they are expected to improve the site. I would advise you of an
example in writing on 29 June 2006 from the managing director of JAH, John Fraser:
…that capital expenditure that is now needed for the efficient functioning and future growth of the airport will, if spent, be
wasted when the airport is forced to relocate.
Can you give me any clarification as to why that statement would have been made?

Mr Mrdak—I am not aware of that statement. I will just check with my officers. I am not aware of that
statement and certainly not aware of any situation that would give rise to that claim.

Senator ADAMS—Mr Fraser himself signed the master plan in January 2006. That was why I was
wondering just what—

Mr Mrdak—The department’s assessment and our advice to the minister in approving the master plan was
that the master plan did provide for the future growth of aviation on that existing site.

Senator ADAMS—When rumours like this start, people get very concerned, especially if they own
businesses at the airport. I have received a letter today highlighting the pressure that the people are under. This
is from a chief flying instructor who owns a business at that facility:
It is not fair on small business to be kept in limbo while the government and property developers play a bizarre game of
monopoly with our Commonwealth asset. I realise that things have not reached the stage where the government is
required to make a decision. However, real damage has been done here day by day as we try to live under the shadow and
it seems that Ascot Capital will drag this out as long as it takes and use whatever means to get what they want, destroying
our businesses with uncertainty in the process.
We have quite a nasty situation at the airport. Do you have any comment on that, as this group has leased the
airport from the Commonwealth?

Mr Mrdak—Just to clarify, this concept has no imprimatur from the Australian government. This concept
is just that at this stage. There have been discussions. I have met with the owners of the airport, together with
Mr Williams and the ministers, but those discussions have been about exploring a concept. There is no
involvement with the Australian government at this point. Former Minister Truss did ask the airport owners to
discuss their concept with the tenants of the airport to gauge their views and also to discuss it with residents
around the location of the new site they were proposing as a new development. This was to ensure that we had
all of the issues on the table. But there is no going forward at this point between the Australian government
and the owners of the airport in relation to taking this concept further. The airport owners may choose to come
back to the government with a firmer proposal, but the Australian government at this stage is not part of
developing any proposal for the closure or the relocation of Jandakot Airport.

Senator ADAMS—Last Wednesday night I attended a meeting at Mandurah, which is adjacent to where
the proposed new airport site is going. There were some 200 people at that meeting. The prospect of having an
airport in their backyard is creating a lot of concern for that community. A number of people have properties
for sale in that area and, of course, their properties are completely on hold because there is no resolution about
whether Jandakot Airport is going to close and this other one is going to become a reality. Is there any way in
which we can alleviate these people’s concerns?

Mr Mrdak—The first stage is for the owners of Jandakot Airport to reach a firm decision as to whether
they wish to proceed with a firm proposal to do this and then put that proposal to the Australian government.
RRA&T 56 Senate Monday, 30 October 2006
RURAL AND REGIONAL AFFAIRS AND TRANSPORT
There have been discussions only around a concept at this point. It is open to people to develop an airport site.
Someone could develop a greenfields airport site at any point in Western Australia and that becomes a
responsibility of the state planning and other authorities as to whether they would approve such an airport
development. Our interest as the Australian government revolves around the lease of Jandakot Airport and the
regulation of the operators of that airport under the Airports Act and the lease given by the Australian
government. We do not have a role in relation to any new airport that might have been developed.

CHAIR—The rezoning of that would be someone else’s area?

Mr Mrdak—If Jandakot’s site was to be rezoned for another purpose, it would be a matter for the state
planning authorities as to the rezoning of any further—

CHAIR—Which comes first, the sale or the rezoning?

Mr Mrdak—At this stage we are nowhere near that—

CHAIR—Obviously you would have to be a deadhead not to get the rezoning before you signed your
money away. At that stage what would the federal government’s attitude be?

Mr Mrdak—We have said to the airport owners in putting this concept to us that they need to have a clear
view from the Western Australian government about what the Western Australian government’s view on
planning would be both around the new site they were proposing and also what may happen to the existing
Jandakot site.

CHAIR—This is the equivalent—and I stand to be corrected—of shutting Bankstown because it would
make Harry Triguboff or some of his mates happy about the development potential. It is like moving the rifle
range from Long Bay way out into whoop-whoop somewhere, say, Goulburn, Mittagong or somewhere else.
That would be equivalent, would it not? Is it 70 kilometres away?

Mr Mrdak—It is of the order of 40 kilometres. I do not know the area.

CHAIR—I think it is more than 40 kilometres. You stand to be corrected on that. It may be closer to 70 or
80 kilometres. It would be a serious disruption. I understand there is an operator at Jandakot who would love
that to happen. He has noisy old World War II aircraft that annoy the hell out of everyone every time they take
off and land. He would be hoping to have it moved, but everyone else who flies a 172, 182—or whatever—
would be seriously inconvenienced. It would be the equivalent of our moving Bankstown to Bowral. I would
love to see us attempt that. There is a legitimate position for the Commonwealth to consider in all of this.

Mr Mrdak—Very legitimate. Hence, as I said, the Commonwealth is in no way supporting any move to
close Jandakot at this time. There is simply a concept being put forward by the owners of Jandakot. The
Commonwealth has not reached a view on it but recognises that the sorts of concerns raised by Senator Adams
are quite valid concerns by the tenants of the airport and the operators at the airport.

CHAIR—It seems to me, upon quick reflection, that this is just a sharp opportunity for a developer to
convert all of this into housing blocks and get millions of dollars in a bank account somewhere, and bugger the
inconvenience to everyone else. We did have a statement recently in Sydney—I actually have not been to
Jandakot—where a developer said that they ought to get rid of all the parks and open space in the city ‘so I can
build more units’. I do not go along with that and I think we should go to war if that is the driver behind this.

Mr Mrdak—As I say, the Australian government’s position is, and remains, that Jandakot is the second
airport. It is the GA airport for Perth, and there is nothing at this stage that has shifted the Commonwealth
from that position.

CHAIR—What they have to be careful of is that money does not speak all languages.

Senator ADAMS—As far as the people who have the lease of the airport at the moment, the directors have
49 per cent foreign ownership, which is the way that it has to be. Have all these directors lived in Australia for
the last five years?

Mr Mrdak—My understanding is that the directors are either Australian citizens or have Australian
residency, but Mr Williams might wish to give some further information.

Mr Williams—What Mr Mrdak said is correct. Just prior to the sale, the proposed new owners of the
airport approached the Australian government in relation to the ownership issues. We reviewed the proposed
ownership structure for the airport and the new owners, and on 31 January—having regard to the ownership
regulations under the Airports Act—a declaration that Ascot Holdings was a substantially Australian
Monday, 30 October 2006 Senate RRA&T 57
RURAL AND REGIONAL AFFAIRS AND TRANSPORT
investment fund and met all the criteria under the act and regulations, was signed by the secretary to the
department. They basically met the foreign ownership requirements.

Senator ADAMS—Is it true or not that the directors have to have lived in Australia in the last five years,
even though they might be Australian citizens?

Mr Williams—I would have to check that level of detail for you.

Senator ADAMS—Could you take that on notice?

Mr Williams—Yes.

Senator ADAMS—As far as environmental issues—this might be something ministers can answer for
me—Jandakot Airport was placed in its position to protect a water mound and it has heritage-listed bush at the
southern end of the airport. If and when this land is sold, would commercial development or residential
development be able to take place there?

Senator Ian Campbell—That is jumping three steps ahead.

Mr Mrdak—We are a long way short of any consideration such as that. You are right; the site has a range
of environmental issues, not least of which is the presence of the water mound and the bushland. I would
imagine that, if the site was being contemplated for any alternative use—and I reiterate that the
Commonwealth is not at this stage at that point—then it would have to satisfy WA planning and environmental
matters and also any Commonwealth legislation in relation to the environment. I would imagine, given the
presence of that, there would be severe limitations on the use of the site for any alternative purpose.

Senator ADAMS—I guess that there is nothing the Commonwealth do about this, but I just wonder if you
are aware that since the new owners took over the lease rentals at the airport have increased by between 64 per
cent and 114 per cent on top of increases of 10 and 11 per cent in the previous two years. We have a real
community concern. There are 900 people who work at Jandakot. You have the Royal Flying Doctor Service, a
brand-new teaching hospital adjacent, which is going to be 10 minutes away, the aero club, which has huge
movements in and out, and two foreign pilot training schools. What I am trying to say, and the reason I have
raised this, is that there is just so much angst, which is going to build and build and build, that I really do hope
that perhaps the minister will be able to look at this fairly quickly and come up with a decision.
It just unfair, and there is so much money and blood, sweat and tears tied up in aviation. I have a history
going a long way back and, having married a flying doctor pilot, I know what it is like. We have been through
all the ups and downs of aviation, and it is pretty hard. When you are running a business there, as a number of
the people who have contacted me are, you just want a resolution so you know you can go forward. They have
aircraft auditors and there are just huge amounts of money tied up in this with their forward planning. If for
any reason this proposal does go forward and the government gives it the okay, things will have to really
change. Already we have one flying school looking at going to Canada and another flying school looking at
relocating to Brisbane. It is a lot bigger than it seems, which is the reason I raised the issue today.

Mr Mrdak—I do appreciate the uncertainty for tenants of the airport. As I say, the position being put by the
owners of the airport is that they believe there are some tenants of the airport who would support a relocation,
but quite clearly you do not want—

CHAIR—Nobody wants noisy planes.

Mr Mrdak—Yes.

CHAIR—Well, good luck to him. He can relocate. Can I just say that this seems to me to be a classic
carpetbagger greed operation. I could not put it more strongly. My understanding is that 24.9 per cent of this
Ascot whoever-it-is—and that is why you employ lawyers: because lawyers are all about the law and not the
truth—is owned by a British Virgin Island company. Now, if ever anything sounded carpetbaggerish, it would
be that, and we are on to it.