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Wednesday, 11 December 1974
Page: 3433

Senator WRIEDT (Tasmania) (Minister for Agriculture) - in reply- The Bill seeks to provide additional funds for the Australian Industry Development Corporation. Senator Durack raised 2 points. One suggests that the AIDC may have some advantage over other financial institutions which are providing development finance for industry, especially the Australian Resources Development Bank. The fact is that AIDC is the only financial institution in Australia that is constrained to seek its borrowings principally overseas. The reason for this was expressed by Sir John McEwen when the original Act was introduced to the Parliament in 1970. He said:

What we want to do by establishing the Australian Industry Development Corporation is to create a facility to tap some of this overseas capital for Australian industry, getting it more in the form of loans and less in overseas equity.

The monetary situation has fluctuated and changed considerably since 1970. But given the widely held view that Australia will continue to be a capital importing nation for some time ahead, this basic role for the AIDC is unlikely to change. Accordingly, it makes perfect sense that the AIDC, as a nationally oriented financial intermediary, should have access, on behalf of Australian industrial companies urgently requiring development capital, to overseas funds on the best possible terms. It is important for the Senate to remember that it was fundamental to the legislation originally introduced into the Parliament that the AIDC should obtain the bulk of these funds on the overseas money market.

The second point that Senator Durack raised is that the AIDC may not be regarded as a successful borrower on the international money market. The fact is that it has been a successful borrower in its own name. For example, in October 1 972 the AIDC successfully negotiated its first overseas public bond issue on terms and conditions accorded only to first class international borrowers. That was a Deutschemark $50m raising for 15 years. More recently the AIDC announced its second public issue on the European capital market- $US25m for 7 years at 10.25 per cent. One of the largest United States dollar issues in Europe under current market conditions, the terms are equal to that of international issues guaranteed by national governments.

I would just mention that international capital markets are going through a period of fundamental change. This, of course, is because of the spectacular growth in the wealth of Middle East oil exporting countries combined with world wide economic uncertainty characterised by rapidly fluctuating exchange rates and, of course, high rates of inflation. That has made for an extremely difficult international borrowing climate. Because of the uncertainties, investors have tended to favour short term investments, and the Arab lenders in particular, with vast sums at their disposal, look for the highest security. Under these circumstances, countries wanting to tap these new and vast sources of capital for their own industrial development have a real advantage if they can raise loans for commercial purposes against their government's own name. It does not follow that the AIDC in its own right is not a successful borrower on the world market, nor does it suggest that its standing is something which overseas lenders would look down upon. It is obvious that its standing is high and secure.

In view of the fact that the Opposition is not opposing the legislation, although certainly Senator Durack has indicated some reservations, I hope that the points I have made will be adequate to satisfy him that it should pass in its present form. I am sure that in this chamber there is agreement on both sides that AIDC is a most worthwhile venture which can only be of benefit to Austraiian industry. In fact, it has been of benefit to Australian industry since its formation and will continue to be so. It will continue to need the support of this Parliament to ensure that the flow of money to it can be maintained.

Question resolved in the affirmative.

Bill read a second time, and passed through its remaining stages without amendment or debate.

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