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Wednesday, 24 March 1965

Senator GORTON (Victoria) (Minister for Works) . - I should like to answer some of the questions that have been raised so far. I think the answer to the point raised by Senator Prowse is that the sums which have been made available for the construction of this project, in both the first and the second Bills, have been made available in two ways, first by a straight out grant, and secondly, by loan. In both Bills portion of the total contribution has been made by grant and portion by loan. The proportion of Australia's contribution has been calculated as a straight out grant and is the same in each case. For instance, in the particular proposition now before us Australia, Canada, Germany, the United Kingdom and the United States are contributing between them, as a straight out grant, £91,659,000 of which Australia's share is £4,669,000. In addition, to make up the increased contribution of £140 million, there are loans from the United States of £22,900,000 and from the International Bank of £26,100,000. This explains the apparent discrepancy. The honorable senator is quite right in saying that there appears to be a discrepancy, but this has arisen because it was not stated clearly enough that the contribution referred only to the grant and not to the loan portion of the funds being made available.

Senator Wrightreferred to section 2.01 of Article II of the Schedule and asked where these loans are set out in the Bill. I did not quite understand his question but I take it he was seeking information about the amount to be repaid. The United States is contributing in two ways. It is contributing 118 million dollars as a straight out grant and an additional 51 million dollars as a loan. I know of no conditions attached to the loan except that, as is the case with bank loans, it shall' ultimately be repaid.

He raised another point about justification for the increase. I cannot tell in detail the justification for this but I know that it was due in part to an increase in the estimated cost and also in part to an alteration in the engineering requirements as a result of a request from Pakistan, provision for the making of such requests being contained in the original Bill. A request was made to the administrator appointed, which in this case was the International Bank, seeking more security than in fact Pakistan thought was contained in the original Bill. Meeting these requirements would have meant a very large increase from the original estimate of 895 million dollars to 1,832 million dollars. The Bank and the countries concerned looked at this and decided it was far too great. Some engineering alterations resulted in an increase of costs. I do not have the details of them. The increases were not due to under-estimating of the costs of the original plan. I suppose the Department could secure the details for the honorable senator if he wished to have them.

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