The Berejiklian government will delay plans for a controversial third Sydney cruise terminal for up to 18 months due to the crisis engulfing the cruise industry from the coronavirus pandemic.
The shutdown of the industry is crippling cruise companies worldwide, and raising serious questions about how quickly demand will recover once travel restrictions are eventually lifted. The Ruby Princess debacle in Sydney has also dealt a severe blow to the industry's reputation.
There has been stiff opposition to building a cruise terminal at Yarra Bay.Credit:James Alcock
Amid the uncertainty, Transport and Ports Minister Andrew Constance said the proposal for a cruise terminal at Yarra Bay had now been "put on hold with all industry and community engagement suspended".
"[The terminal is] not a priority for government or industry at this time. We're still in the middle of a COVID crisis," he said.
But state and federal Labor, and locals opposed to a $500 million terminal at Yarra Bay or Molineaux Point, next to Port Botany, want the proposal scrapped altogether.
The government and industry's case for building a new terminal has been predicated on demand surging for cruise trips.
Maroubra MP and former state Labor leader Michael Daley said the plans for a terminal at Yarra Bay should be abandoned as the finances of the cruise industry and the state have taken a battering from the impact of coronavirus.
"This government has always shown a willingness to waste taxpayers' money on stupid projects, and proceeding with a cruise terminal at Yarra Bay would be wasteful and irresponsible at the extreme," he said.
The share prices of Royal Caribbean and the world's two other largest cruise lines, Carnival and Norwegian, have plunged more than 70 per cent since the start of the year.
The crisis gripping the industry comes eight months after the state's Port Authority revealed it had engaged in "market soundings" with the three largest cruise-lines about a third terminal. It also told a budget estimates hearing in August that Royal Caribbean was willing to contribute money "if there is an appropriate mechanism".
But Mr Daley said the financial hit to Royal Caribbean from coronavirus meant it was now unlikely the company would be willing to tip money into helping pay for the cost of the terminal.
Royal Caribbean said it still held the view that the growth of the cruise industry required another terminal to the east of the Harbour Bridge in Sydney, and it would work with the government to achieve that objective. It did not say whether it was still willing to commit funding, however.
The ports authority had been preparing since September a detailed business case for a potential cruise terminal in the area between Molineaux Point and Yarra Bay. It has already finished a strategic business case, which is the preliminary stage of an infrastructure project.
The federal Labor MP for Kingsford Smith, Matt Thistlethwaite, said the state of the cruise industry further undermined the case for a cruise terminal at Yarra Bay. "The economic case was marginal at best but it's now in tatters. The government should just drop it," he said.
Mr Thistlethwaite said the federal and state government budgets were under "enormous pressure" due to the pandemic, and funnelling taxpayer funds into building a cruise terminal, for which the business case was marginal at best, was unjustifiable.
"Something like this would be well down the list [of priorities]," he said.
But Cruise Lines International Association said the industry remained committed to supporting the government's process to finalise a business case for a third terminal.
The peak industry body said it was too early to determine the impact of coronavirus on wider travel trends, but added that infrastructure planning was a long-term process.
The prospect of a terminal at Botany Bay has sparked criticism about the impact it will have on the local environment, Indigenous cultural practices and planes landing nearby at Sydney Airport.
Maria Poulos from the Save Yarra Bay Coalition said it would be "irresponsible" to pursue the project, and the government should instead prioritise essential services such as healthcare.
"A vanity project for the cruise industry should not be high on the list," she said. "This is not the time to be advancing a mega cruise ship project, which in our view was misguided in the first place. It has been hanging over us like a dark cloud."
More than two years ago, a reference group chaired by former NSW Liberal leader Peter Collins recommended that the Navy and cruise ships share Garden Island in Sydney Harbour. But a shared facility there was later ruled out by the federal government as unworkable.
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