- Cocos (Keeling) Islands Airfield Upgrade
Department of Defence
2.1The Department of Defence (Defence) seeks approval from the Committee to proceed with the proposed project Cocos (Keeling) Islands Airfield Upgrade Project.
2.2The Cocos (Keeling) Islands are an Australian territory in the Indian Ocean, approximately 3,000 kilometres north-west of Perth, Western Australia. The largest two islands, West Island and Home Island, support a population of approximately 600 people. The project works will take place on West Island.
2.3Defence stated that ‘in recent years, the P-8A Poseidon aircraft has replaced the AP-3C Orion aircraft as the Air Force’s primary maritime surveillance aircraft.’ Currently the Cocos (Keeling) Island runway does not have the sufficient length, strength, and width to accommodate the aircraft. Defence’s objective for the project is to upgrade the airfield to enable the operation of the Poseidon aircraft. The project will also improve the airfield’s safety for civilian and military aircraft.
2.4The estimated cost of the project is $567.6 million (excluding GST).
2.5The project was referred to the Committee on 24 November 2022.
Conduct of the inquiry
2.6Following referral, the inquiry was publicised on the Committee’s website and via media release.
2.7The Committee received two submissions and one confidential submission. A list of submissions can be found at Appendix A.
2.8On 28 February 2023, the Committee conducted a site inspection on the Cocos (Keeling) Islands, which was followed by a public and in-camera hearing in Perth on 3 March 2023. A transcript of the public hearing is available on the Committee’s website.
Need for the works
2.9The location of the Cocos (Keeling) Islands makes it strategically important as it is uniquely positioned to support Defence operations in the Indo-Pacific region. The 2020 Defence Strategic Update notes that there has been an increase in geopolitical uncertainty due to strategic competition, which is expected to significantly influence the Indo-Pacific region. As such, it is critical that the airfield has the capacity to support Defence operations.
2.10Defence considers that the Cocos (Keeling) Islands airfield is a key element of the P-8A Poseidon maritime patrol and response capability. Defence’s requirements of the airfield are not currently being met due to its inability to operate the aircraft. Furthermore, the airfield’s lighting and drainage is considered inadequate and non-compliant. There are also concerns that the operation of the airfield may be impacted by a future sea level rise.
2.11At the public hearing, the Committee enquired whether the project would be consistent with the latest Defence Strategic Review (submitted to the Government on 14 February 2023). While Defence was unable to comment on this matter, it did note that it would be in a better position to assess whether the works align with the Review’s recommendations in late 2024 when the airfield works are due to commence.
Options considered
2.12Defence considered three options in the development of this project.
- Option 1 (do nothing) was discounted as the airfield issues would have gone unaddressed and would worsen. This option would also not support Defence’s requirement to operate heavier aircraft from the airfield.
- Option 2 (essential scope, no extension to the runway) was also discounted as while this option would have addressed the airfields maintenance and availability issues, it would have continued to limit Defence’s capabilities.
- Option 3 (enhanced scope, including 150 metre extension to the runway) was the preferred option as this option would deliver the scope elements from option 2, as well as a runway extension.
- Defence is of the view that option 3 represents the best value for money solution for the Commonwealth. This option will address the project needs from a whole-of-life cost perspective and ensure that the airfield can support Defence’s required capabilities.
Scope of the works
2.14In its submission, Defence outlined the scope of works for the project under option 3, which includes seven work elements and three supporting elements.
- Work Element 1 – Existing Runway:
- Runway Strengthening – overlay runway with asphalt to accommodate heavier aircraft and mitigate flooding/sea level rise
- Runway Shoulders – construct shoulder pavements along the full length of the runway
- Turning Nodes – construct new turning nodes at runway ends to allow aircraft to backtrack
- Runway End Safety Area – strengthening the safety area to comply with requirements for larger aircraft.
- Work Element 2 – Four Existing Taxiways:
- Taxiway Strengthening – overlay the taxiways with asphalt to accommodate heavier aircraft
- Taxiway Shoulders – widening of taxiways.
- Work Element 3 – Existing Apron (consisting of five parking bays of different sizes for various civilian and military aircraft):
- Apron Strengthening – overlay with asphalt to accommodate heavier aircraft
- Apron Configuration – reconfigure of apron layout to create two dedicated spots for P-8A aircraft.
- Work Element 4 – Lighting. The airfield requires lighting upgrades and additional apron floodlighting:
- Low Intensity Runway Lighting – a new single intensity lighting system comprising runway edge lights, runway threshold/end lights and runway turning node lights
- Precision Approach Path Indicator– augment the existing indicator installation to accommodate changes to runway pavement levels and to maintain minimum wheel clearance over each runway threshold
- Taxiway Edge Lighting– new lighting for all four taxiways
- Illuminated Wind Direction Indicator– installation of a single central indicator midway along the runway
- Apron Floodlighting – replace apron floodlighting, including poles and cabling
- Movement Area Guidance Signs – illuminated distance to run markers
- Cabling, Pit and Duct System – a new pit and duct system to house primary, secondary, and parallel circuit cables. A new panel to house the mains isolating transformers and associated distribution and control equipment.
- Work Element 5 – Drainage and Flooding. The airfields drainage system is inadequate and requires an upgrade as the sites topography results in regular inundation and ponding of water:
- Relocate existing drainage – reroute the drainage path by constructing graded drains to existing outlets
- Taxiway Drainage – install reinforced concrete box culverts underneath taxiways
- Apron Drainage – install a trench drain and manual control valve to capture any spills during refuelling
- Coastal Engineering – construct a seawall of exposed geotextile sand containers which would eliminate the need to import rock to implement a steeper slope.
- Work Element 6 – Runway Extension.The southern end of the runway will be extended to accommodate the P-8A Poseidon aircraft. Works in Elements 1-5 will be incorporated to ensure consistency:
- Extend the existing runway by 150 metres including works from elements 1-5
- A 240 m x 90 m Runway End Safety Area at the southern end of the runway
- Line markings
- Clear vegetation from within the runway extension footprint.
- Work Element 7 – Defence Legacy Waste Removal. The project’s workforce and equipment present an opportunity to remove Defence legacy waste material. While the method for doing so is still being determined by Defence, the current requirements are:
- Waste removal – land-based waste removed by an excavator, lagoon waste removal will be done by a low-draft workboat. Fragile waste will not be removed as it will naturally deteriorate. Waste that has become functional to marine habitat will also not be removed.
- Waste packaging, transport, and disposal – the waste will be screened, separated, and containerised before transportation to Australia for disposal.
- Supporting Element 1 – To support construction and minimise impacts to the local population several temporary facilities are required:
- Permanent Material Offloading Facility – the existing port is inadequate for the handling of bulk aggregates. Costs associated with the construction and demolition of a temporary facility were comparable with building a permanent structure. On completion of the project, Defence will hand the facility over to the Department of Infrastructure, Transport, Regional Development, Communications and the Arts for the benefit of the Islands community.
- Stilling Basin Compound – the Stilling Basin is an open stockpile area which will be used to: facilitate vessel loading and unloading, stage cargo including plant, equipment, and materials, undertake biosecurity inspections, wash-down outward-bound cargo, stockpile bulk aggregates, refuel plant and equipment.
- Quarantine Station Compound – the compound will be required for material storage, processing, and manufacturing during the project’s delivery phase.
- Temporary Accommodation Camp – a temporary camp is required to support the Project. It will be a modular structure capable of accommodating the projects workforce, and it will also function as a cyclone shelter. Some road works are associated with the camps construction. Upon completion of the project, the site will be returned to its former condition.
- Supporting Element 2 – General Support. The scope and remote location of the project will entail workforce support:
- import of food, preparation of meals and waste removal
- transportation and accommodation costs
- provision of fuel and general stores
- the optimum roster for the main airfield construction crew is an ‘all in, all out’ approach of 20 days on-island and eight days rest period off-island.
- Supporting Element 3 – Logistics. Where possible, the project would provide a standalone project-specific supply chain to transport personnel, equipment, and material. This will minimise disruption to the local community. A logistics subtractor has been engaged to provide:
- Freight by sea: Sea freight is the primary logistics method to support bulk cargo and sustainment requirements.
- Freight by air: Commercial air freight will be utilised to facilitate the uplift of perishables, high-value low-volume cargo, and urgent items.
- Additional charter flight services: While existing flights will be utilised throughout construction, additional charter services from mainland Australia will be required to accommodate the peak workforce during the construction stage of the project to minimise service impacts to locals and tourists.
- In relation to the project’s operational impacts on the airfield, Defence advised that aircraft will be unable to use the runway while work shifts are taking place on the airfield. At the end of each work shift Defence will ensure that the runway is clear and safe to operate. Defence noted that works are designed to support a four-hour reinstatement time to accommodate any emergency unscheduled aircraft.
Freshwater and Wastewater Accessibility Upgrades
2.16The potable water source for the community on West Island is an aquifer which sits beneath the existing runway. Maintaining water security has been a central concern for Defence throughout the development of the project, especially since the aquifer is vulnerable to contamination.
2.17As part of the development of the project, Defence has worked closely with the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (the Department), which manages infrastructure on the island on behalf of the Commonwealth Government. It was decided that to support the project, and to secure permanent water resilience for the benefit of the community, a water desalination plant would be constructed by the Department of Infrastructure with a financial contribution from Defence. Defence has already contributed $834,000 and pending approval of the project, a further $1.2 million will be contributed.
2.18Defence has also advised the Committee that West Island’s wastewater treatment plant, and the associated reticulation, are at capacity. The Department of Infrastructure also will be addressing this issue by upgrading the wastewater plant. Defence will also be contributing to the upgrade to ensure that the additional personnel working on Defence’s project will not negatively impact the local community.
Workforce requirements
2.19In the public hearing, the Committee questioned Defence’s ability to obtain the required workforce due to the remote location of the project. Mr Anthony Lahood, Contractor Representative and National Defence Manager, acknowledged that this issue was ‘a challenge that all contractors face in the current climate.’ Mr Lahood stated that:
What we've done is we've had some early engagement with contractors on those key first two contracts on our critical path, being the accommodation provider and the wharf MOV contractor. Both of those have done forward planning with respect to their resources so that we can actually start the project with planned resources. At this stage, that's a very good plan that we've adopted for the project. Moving forward, for the remaining workforce, we will have a specific HR plan and strategy to attract and retain our workforce throughout the course of the project.
2.20In relation to the project’s operational impacts on the airfield, Defence advised that aircraft will be unable to use the runway while work shifts are taking place on the airfield. At the end of each work shift, however, Defence will ensure that the runway is clear and safe to operate. Defence noted that the airfield is not subject to high volumes, with two scheduled commercial flights per week. Defence has included a four-hour reinstatement time to accommodate any emergency unscheduled aircraft.
Community and stakeholder consultation
2.21In its submission, Defence advised that a community consultation and communications strategy was developed in recognition of the importance of providing residents an opportunity to offer input or raise concerns. Engagement with the community and stakeholders involved:
- advertisement of community information forums through the community newsletter and promotional posters in prominent locations across West Island and Home Island. Both forms of advertisement were published in English and Cocos Malay, ensuring all members of the community were aware of the information forums.
- four community information forums held between October and December 2022, two on West Island and two on Home Island. A Cocos Malay translator was engaged to ensure that the information was clear and understandable.
- five community consultation activities were held between August 2018 and November 2021. The purpose of the consultation sessions was to keep the community updated on the project progress and to afford an opportunity for the community to make suggestions that would be incorporated into the project.
- key stakeholders including Federal, State and Local Members of Government, as well as community and business groups, were invited for a briefing regarding the project.
- Defence stated that the information regarding the proposed works was ‘generally well received’ by the community and stakeholders. It was noted that 49 people in total attended the community information forums, representing a significant percentage of the adult population. Community concerns regarding the project centred around the design of the project and its impacts, future planning, and potential job opportunities.
- Concerns were also raised in relation to the potential increase in Defence operations on the island. Air Commodore Houghton advised that an increase in operations due to the P-8A Poseidon activities was not forecast, but that the level of activity would depend on operational needs.
- Overall, Defence stated in its Community Consultation Report that ‘no issues were identified during … community consultation activities that might have an impact on the proposed works.’
Cost of the works
2.25Option 3 for the proposed works has an estimated cost of $567.5 million (excluding GST). This cost includes ‘project management and design fees, construction costs, information and communications technology, furniture, fittings, equipment, contingencies and an allowance for escalation.’ Defence noted that the total cost of the works includes a 15 per cent contingency of $74 million, compared to a typical Defence contingency of five per cent. Defence explained that this figure was to account for ‘potential future volatility in market prices in the construction sector.’
2.26Defence advised that it is expected that the proposed works would result in an increase in operating and sustainment costs. These costs will be the responsibility of the Department, which will continue to manage the airfield and associated infrastructure.
2.27Defence provided further details on project costings in their confidential submission and during an in-camera hearing. The Committee is satisfied with the rationale underpinning the project costing.
Revenue
2.28There will be no revenue generated by this project.
Public Value
2.29Defence considers that the public value of the project will include:
- Economic impacts: opportunities for small and medium enterprises will be promoted through construction sub-contractor packages.
- Employment opportunities: it is expected that there will be employment opportunities for the local and regional workforce. The construction workforce is predicted to average 110 people per day when airfield works commence. This will be complemented by significant purchase and logistics efforts off-island.
- Local industry and Indigenous business involvement opportunities: Works will comply with Government policy regarding local industry participation, which requires tenderers to provide detailed commitments on engagement and development of Australian industry. It is currently estimated that local industry participation will account for 90 per cent of the value of reimbursement packages (local industry includes businesses in the Indian Ocean Territories and broader Western Australia). The project’s Indigenous Participation Plan will include the approach for engagement of Indigenous businesses, which will likely be based in Western Australia.
- Existing infrastructure services: the project will improve existing infrastructure services by addressing current issues as well as the provision of a material offloading facility. The project will also contribute to the provision of new sea water reverse osmosis desalination plant and wastewater treatment plants, which will increase water capacity on West Island.
- Defence informed the Committee that there would also be opportunities for local apprenticeships and traineeships. Mr Anthony Lahood commented that:
Part of Fulton Hogan's ethos as a company is to give back to the community, and part of the way we give back is by engaging with the local community via recent community consultation. It was pretty evident that the local schools and the local young population want those opportunities. We're very experienced in providing those and engaging with the local schools and the local population to see what the willingness is there and then match that with the skill set with respect to the work that we're going to be rolling out. So it is part of our plan as we move forward with this project.
2.31The Committee queried whether temporary accommodation for the project could be made permanent to address current accommodation shortages on West Island. Defence advised that based on the cost-benefit analysis and the intent of the Department, the current intention was for the projects accommodation to be temporary. Defence, however, noted that once the project was in the delivery phase, it would consult with the Department to explore opportunities around the accommodation that could benefit the local community.
2.32Air Commodore Tilley further stated that:
We have no issues in upgrading the accommodation to be better for a more permanent structure going forward. If it benefits the local community with the tourism going forward, we will look at doing that.
Committee Comment
2.33The Committee was satisfied that the proposed project has merit in terms of need, scope, and cost.
2.34The Committee notes that the cost of the project significantly exceeds the original reported cost of the project. The Committee discussed the cost increase with Defence, and was satisfied with the explanation it received.
2.35The Committee noted the strong impact this project would have on the local community, and focussed during the inquiry on the degree and nature of community consultation that Defence has undertaken. The Committee was pleased that Defence has undertaken extensive community consultations, and that it has endeavoured to address concerns that have been raised.
2.36Given the nature of the project and its potential to impact the community, the Committee advises that community consultation should be ongoing. Defence must ensure that the community has an avenue for raising concerns as the project progresses, and that Defence and any contractors or sub-contractors address matters in a timely manner.
2.37The Committee appreciated Defence’s commitment to waste removal for the project under work element seven. The Committee suggests that Defence guarantee to the local community that all project waste will be removed by the end of the project to ensure that the project does not come at the detriment to the local community.
2.38The removal of legacy waste is also a welcome part of the project, and the Committee encourages Defence to ensure that as much legacy waste is removed as is possible, noting the ecological and safety constraints. The Committee also suggests that Defence consider the removal of other island waste as part of the project should there be an opportunity to do so.
2.39Water security for West Island is a paramount concern in relation to this project, especially due to the only water source being at risk from the project. The Committee was pleased to hear that Defence had extensively worked with the Department to develop a solution to this issue. The Committee noted that Defence would be contributing to the Department’s proposed Seawater Reverse Osmosis Plant Project as well as upgrades to the Island’s wastewater infrastructure.
2.40Having regard to its role and responsibilities contained in the Public Works Committee Act 1969, the Committee is of the view that this project signifies value for money for the Commonwealth and constitutes a project which is fit-for-purpose, having regard to the established need.
2.41The Committee recommends that the House of Representatives resolve, pursuant to Section 18(7) of the Public Works Committee Act 1969, that it is expedient to carry out the following proposed works: Department of Defence -Cocos (Keeling) Islands Airfield Upgrade Project.
2.42Proponent entities must notify the Committee of any changes to the project scope, time, cost, function, or design. The Committee also requires that a post‑implementation report be provided within three months of project completion. A report template can be found on the Committee’s website.
2.43The Committee recommends that Defence return to provide the Committee with a project midpoint briefing. This briefing will report on matters including but not limited to how the project has aligned with the Defence Strategic Review, how the project’s budget has been affected by the current economic climate and a report on ongoing community consultation.