Govt to co-fund Changi's big expansion

The Government will co-fund Changi Airport's biggest expansion to date, including the construction of the future Terminal 5 (T5), with other stakeholders chipping in.

Revealing this to The Straits Times in an exclusive interview last week, Senior Minister of State for Transport Josephine Teo said the final cost-sharing has not been decided.

The project - expected to cost tens of billions of dollars - is an investment that is beyond the means of Changi Airport Group (CAG), its chairman,Mr Liew Mun Leong, had earlier told The Straits Times.

Mrs Teo said the right thing to do would be to share the investment costs between the Government, the CAG and those who will use the facilities.

"The Government will look at this from the perspective of how it benefits Singaporeans and Singapore as a whole," she said.

In charging airlines and travellers, the Government is mindful that Changi Airport must remain competitive in an increasingly challenging environment.

The project aims to cement Singapore's position as a key hub for regional and global traffic, amid fierce competition from rival airports in Hong Kong, South Korea and elsewhere.

The development of the 1,000ha Changi East site-about three-quarters the size of the current airport premises - includes the construction of T5, a third runway, new taxiways and plane parking areas, as well as cargo facilities.

In an interview with The Straits Times, the CAG's Mr Liew had suggested that one option was for the Government to foot the entire bill, leaving his team to run the airport.

Explaining the rationale for co-funding, Mrs Teo, who is also Senior Minister of State for Finance, said: "Fiscal requirements for the Government, as a whole, will become more significant.

"We already know that we are going to have to spend more on healthcare. We have a lot of social programmes which we think are important. We want to continue to invest in education for our people and a large part of it is also the Skills- Future piece."

Still, the Government knows how vital the aviation sector is and will factor this in when funding decisions are made, she said.

"If you look just at the number of people working at the airport, it is quite modest; 77,000, 3 per cent of GDP," she said.

"But if you look at it through a broader lens and ask which are all the other sectors that will be quite hurt if your air hub was lousy, then you would add tourism, finance, retail; and if you add all of those sectors, it is another 16 per cent of the economy, another half a million people...Then you say the externalities are very big. Therefore, when you develop Changi East and it's a massive investment, it's reasonable for the Government to bear a part of the costs."

Pressed further on what this could amount to, she said: "The Government is sensible."

Citing the MRT system as an example, she pointed out that the Government funds all the infrastructure and first set of rolling stock, which accounts for about 90 per cent of the total start-up costs.

Associate Professor Terence Fan, a transport specialist from the Singapore Management University, said the Government should consider some private sector involvement in the Changi East project.

"When the private sector is involved, whoever pays is keen to ensure that resources are used efficiently. This helps the Government get the best bang for its buck," said Prof Fan.

karam@sph.com.sg

This article was first published on Aug 5, 2015.
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