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Thursday, 25 May 1972
Page: 2078

Senator COTTON (New South WalesMinister for Civil Aviation) - I move:

That the Bill be now read a second time.

With the concurrence of honourable senators I incorporate my second reading speech in Hansard. This bill seeks the approval of Parliament to borrowings by the Commonwealth not exceeding the equivalent of $US34m - $A28.5m - to assist in financing the purchase by the Australian National Airlines Commission - Trans-Australia Airlines - of 4 Boeing 727- 200 jet aircraft and related equipment. These aircraft, the total cost of which will be approximately $US42m - $A35.6m - are expected to be delivered between November 1972 and November 1974. Generally, when we have introduced legislation for borrowings to assist in the purchase of new aircraft by Qantas Airways Ltd and TAA, the loan agreements have already been signed, but have usually been conditional on appropriate legislative authority being given later. On this occasion, borrowing arrangements for the purchase of the aircraft, approval for which was given in January, have not been finalised at this stage. The amount to be raised for TAA will probably be borrowed in 2 currencies. An amount of $US16.1m, or slightly less than one-half of the proposed borrowings, will be provided by the Export-Import Bank: of the United States. Interest on this amount will be payable at the rate of 6 per cent per annum and repayments will be made over the last 5 years of a 10 year period commencing on the delivery dates of each aircraft. The documentation for this loan has yet to be settled. The major portion of the remainder of the proposed borrowings will probably come from European sources, at an interest rate comparable to that carried by the Export-Import Bank loan. The balance of the funds to be borrowed is expected to be provided by commercial banks in the United States.

Other arrangements for the loans will be similar to those approved by Parliament for previous loans for TAA and Qantas in recent years. In particular, the Commonwealth will be the borrower in the first place, and the proceeds will be made available to TAA on terms and conditions to be determined by the Treasurer pursuant to clause 6 of the Bill. These terms and conditions will be identical with those under which the Commonwealth itself borrows the money. The airline will be required to meet all charges under the loan agreements. Consequently, the Commonwealth will, as usual, assume the function of an intermediary in these arrangements. The detailed terms and conditions of each of the loans to be arranged will be subject to approval by the Loan Council. This is the eleventh occasion on which Parliamentary approval has been sought to borrowings by the Commonwealth on behalf of TAA. Borrowings under previous similar legislation now total the equivalent of $A79.6m. Of this amount, $A37.5m has been repaid by TAA while $A42.1m is still outstanding. I commend the Bill to honourable senators.

Debate (on motion by Senator O'Byrne) adjourned.

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