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Tuesday, 4 May 1971

Senator COTTON (New South WalesMinister for Civil Aviation5.57) - I move:

That the Bill be now read a second time.

I will try to get through this as quickly as I can. Then, with the indulgence of honourable senators, we can put it down before the suspension for dinner. The only other observation I make is that there is another Bill to be introduced ahead of those on the schedule. It is the Ministers of State Bill 1971 and it will come immediately after this. This Bill seeks the approval of Parliament to the guarantee by the Commonwealth of a$US23.2m ($A20.7m) borrowing by the Administration of the Territory of Papua New Guinea from the International Bank for Reconstruction and Development. The proceeds of the loan will assist in financing a major hydro-electric project on the upper Ramu River in the highlands of New Guinea, about 85 miles north west of Lae. The project was examined by appraisal missions from the International Bank in 1969 and 1970 and the loan documents were settled recently during negotiations in Washington which were attended by representatives of the International Bank, the Commonwealth, the Territory Administration and the Electricity Commission of the Territory. The Administration will onlend the proceeds of the loan to the Electricity Commission which, under an associated project agreement between the Commission and the Bank, is responsible for the actual construction work. Work on the project will commence shortly. It involves the construction of an underground power station on the Ramu River with an initial installed capacity of 45 megawatts; approximately 320 miles of transmission lines; 4 transformer substations at Lae, Madang, Goroka and Mount Hagen; and the enlargement of transformer capacity at Kundiawa and Kainantu substations. The project is estimated to cost $A30.3m and the loan from the International Bank will cover the foreign exchange component of this total cost.

Borrowings by the Territory Administration automatically carry a Commonwealth guarantee by virtue of the operation of section 75a of the Papua and New Guinea Act 1949-1968. However, with loans from the International Bank, a formal guarantee agreement is required from the Commonwealth and this must be authorised by specific legislation. The guarantee agreement for this loan, which is shown as the first schedule to the Bill, follows the form of the 2 guarantee agreements previously approved by Parliament in connection with a telecommunications loan made by the International Bank to the Territory in 1968, and a highways loan made in 1970. The present loan carries an interest rate of 7.25 per cent and is for a period of 25 years, with repayments commencing after 5 years. A committment fee of threequarters of 1 per cent per annum is payable on undrawn balances until the loan is fully drawn.

The Bill provides for Parliamentary approval of the guarantee agreement. It makes consequential provision to ensure the effectiveness of undertakings in the guarantee and loan agreements regarding freedom of payments from Australian taxation or restrictions imposed by Australian law. It also includes an appropriation of moneys required for the Commonwealth to make any payments under the guarantee. I commend the Bill to honourable senators.

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

Sitting suspended from 6.1 to 8 p.m.

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