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Thursday, 14 October 1971
Page: 2361

Mr PEACOCK (Kooyong) (Minister for the Army and Minister assisting the Treasurer) - I move:

That the Bill be now read a second time.

This Bill seeks parliamentary approval to a borrowing by the Commonwealth of up to $US90m from the Export-Import Bank of the United States to assist in financing the purchase of general defence equipment in the United States, and approval for the execution of the loan agreement on behalf of the Commonwealth for this borrowing. Under the Loan (Defence) Acf 1970, the Commonwealth arranged borrowings of $US89m to finance orders for general defence equipment placed with United States suppliers in 1969-70. The amount of that credit has been fully committed.

Under the Loan (Defence) Act (No. 2) 1970, the Commonwealth arranged borrowings of $US123m to finance orders for general defence equipment to be placed with United States suppliers during 1970-71. However, $US74.2m of this loan was subsequently cancelled by the Commonwealth. This cancellation was due in large part to a re-evaluation , by the Service departments of equipment needs during that year. Negotiations have recently been completed for a credit to cover orders placed during 1971- 72. The present Bill will provide the necessary authority to enter into an agreement for this further credit.

The loan agreement with the ExportImport Bank which is set out as the schedule to the Bill, follows the usual form of agreements with the bank for defence loans. The loan will carry an interest rate of 6± per cent - the rate current for this type of Joan when the. loan was approved in July 1971. A commitment fee of onehalf per cent will be payable on the undrawn amount from 8th August 1971. Drawings on the loan may be made at any time up to 31st December 1975, and repayment of each amount drawn will be in 14 semi-annual instalments commencing on 15th November next following the close of the financial year in which the amount was drawn. Since the borrowing is for defence purposes the approval of the Loan Council is not required. I commend the Bill to honourable members.

Debate (on motion by Mr Crean) adjourned.

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