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Wednesday, 13 September 1972
Page: 1351

Mr GARLAND (Curtin) (Minister for Supply and Minister assisting the Treasurer) - I move:

That the Bill be now read a second time.

This Bill seeks the approval of Parliament to borrowings by the Commonwealth not exceeding the equivalent of $US25m (SA21m) to assist Qantas Airways Ltd in financing the purchase of a sixth Boeing 747 jet aircraft, spare parts and related equipment at an estimated cost of approximately $US29m (SA24m). The aircraft is due to be delivered in March 1974. The Commonwealth has already arranged loans totalling $US139m ($A116m) to assist Qantas in financing the purchase of its first 5 Boeing 747 aircraft. These loans were approved by the Loan (Qantas Airways Limited Act 1968, the Loans (Qantas Airways Limited) Act 1971 and the Loans (Qantas Airways Limited Act (No. 2) 1971. The borrowings arranged under the authority of the last Act were applied to the financing of the fifth aircraft. At the time the Bill for that Act was introduced, the House was informed that Qantas had entered into a contract with the Boeing company for the purchase of a sixth Boeing 747 aircraft with an option to cancel delivery at any time on or before 1st July 1972. The date of the option was subsequently extended by the Boeing company and Qantas is now making arrangements to confirm delivery of the aircraft.

Generally, when we have introduced legislation for borrowings to assist in the purchase of new aircraft by Qantas, 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 have not been finalised at this stage as approval for Qantas to proceed with the purchase has only recently been given. These borrowings on behalf of Qantas are s;ecialised financing arrangements related to the particular requirements of the airline for the purchase of aircraft overseas and are in a different category from general purpose borrowings by the Commonwealth overseas. A central element in the financing arrangements is the participation in them by the ExportImport Bank of the United States, which specialises in providing credit on terms tailored to assist in financing the purchase of such items of capital equipment as Boeing 747 aircraft. I would mention that it is expected that the overall result of all the Commonwealth's overseas debt operations, including aircraft borrowings, this financial year will be a substantial net reduction in overseas indebtedness.

As a step towards making arrangements for the financing of the sixth aircraft, an application has been lodged with the Export-Import Bank of the United States for a loan of $US11.3m, which is slightly less than one-half of the proposed total borrowings. The current lending terms of the Bank for aircraft finance are interest at the rate of 6 per cent per annum with repayments over the last 5 years of a 10 year period which commences on the delivery date of the aircraft. The remainder of the proposed borrowings will be sought from other sources at an interest rate comparable to that carried by the ExportImport Bank loan. These terms are acceptable to Qantas. Other arrangements for the loans will be similar to those approved by Parliament for previous loans for Qantas and Trans-Australia Airlines in recent years. In particular, the Commonwealth will be the borrower in the first place, and the proceeds will be made available to Qantas on terms and conditions to be determined by the Treasurer pursuant to clause 7 of the BUI These terms and conditions will be identical with those under which the Commonwealth itself borrows the money. The airline will be required to meet al) 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 Australian Loan Council. Borrowings under previous similar legislation now total the equivalent of $A316m. Of this amount, approximately $A166m has been repaid by Qantas. I commend the Bill to honourable members.

Debate (on motion by Mr Charles Jones) adjourned.

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