A newly created regional airport infrastructure fund is among the options under investigation as an alternative source for the $65million needed to upgrade Newcastle Airport's runway to international standard.
The airport's management remained confident on Wednesday that the project would be funded despite missing out in the federal budget.
But the challenge is becoming increasingly difficult - in addition to finding a funding source, the money needs to be secured in the next six months to allow the upgrade to coincide with a $120 million Department of Defence maintenance project for the Joint Strike Fighter project.
The Newcastle Herald understands the Department of Defence is supportive of the upgrade, however, it has refused to put money towards it.
A City of Newcastle spokeswoman said it was not possible for the airport's owners (Port Stephens and Newcastle councils) to lend funds for the project.
"City of Newcastle and Port Stephens Councils only last year agreed to act as guarantor for the airport's current $60 million loan to fund the Astra Aerolab development. We can do no more given the Local Government Act does not allow us to issue loans, even if we had the funds to do so," she said.
"It's disappointing that the federal government did not include the runway expansion as part of the budget's $7.5 billion spend on transport and infrastructure. That said, the government has not said no to the project and discussions remain ongoing.
"City of Newcastle understands Newcastle Airport will pursue competitive grant funding opportunities and existing federal portfolio budgets as options to progress the project."
The two most likely funding sources now are the the $200 million Building Better Regions grant scheme and the newly created $100 million Regional Airports Program.
Airport chief executive Peter Cock said he remained confident of a successful outcome for the shovel-ready project.
"There have been a number of significant pools of funding designated for regional development and aviation support as part of this budget process," he said.
"We feel ours is a compelling case and should be successful in attracting some of that funding.
"At a time when the government is seeking to stimulate the economy, invest in infrastructure, develop jobs and offer hope, this upgrade is perfectly placed. We firmly believe that the government understands the importance of this project."
We firmly believe that the government understands the importance of this project."Newcastle Airport chief executive Peter Cock
Lyne MP David Gillespie said he would continue to advocate on behalf of the project.
"I'm still committed to shaking the tree and getting some funds from somewhere," he said.
"Not everything gets announced in the budget.
"It's a really good value project and the bean counters agree it's a bargain but they are committed to the max so to try and get money out of them is difficult."
Tourism, higher education, global bloodstock transport and freight logistics are just some of the sectors that would benefit from upgrading the runway to international standard, also known as Code E status.
The project is also rare in that it has attracted unanimous support from business and industry groups and from across the political divide.
A Code E runway, suitable for both international passenger aircraft and the needs of the RAAF base, would involve creating a runway that is 800millimetres deep with 350 millimetre flanges.
It is estimated the project would create 4500 jobs and generate $12.7 billion in economic benefits through international airfreight, industrial expansion and increased tourism traffic over the next two decades. There would also be an immediate economic impact.
"If the federal government really wants to fund a job maker in the Hunter they can't look past the runway upgrade," Port Stephens mayor Ryan Palmer said.
"The business case is clear, the upgrade equals jobs."
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