The Japanese can build offshore airports. Hong Kong and Macau have airports on reclaimed land. I don't see why an offshore airport hasn't been considered for Sydney. Yes, it's expensive, but if it can be made to work for Osaka etc (it's not like construction costs in Japan are that low...) surely it could be made to work for a city/airport the size of Sydney.
Alternatively, what about a long taxiway and (at least) a short turboprop-capable runway on Kurnell peninsula?
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