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Thursday, 13 October 1983
Page: 1805

Question No. 535

Mr Campbell asked the Minister for Defence Support, upon notice, on 14 September 1983:

(1) Is there an Australian component in the Mercedes-Benz contract for the supply of trucks to the Army.

(2) What contractual obligations does Mercedes-Benz have and how are they fulfilled.

Mr Howe —The answer to the honourable member's question is as follows:

(1) I can confirm that there is an Australian component in the Mercedes-Benz contract for the supply of the 4 ton truck to the Army.

(2) Contract value on Mercedes-Benz is $57.75m at July 1981 prices. The contract calls for virtually 100 per cent Australian Industry Participation under two heads

Australian content in locally manufactured vehicles to a total of $24m that is, 42 per cent. This obligation is met progressively as trucks are delivered and now stands at $4.08m.

Plus a further $34m in offset orders on Australian industry for components to be incorporated in other Mercedes vehicles.

This obligation is to be fulfilled not later than 5 years after the due date of delivery of the last vehicle in June 1987. To date, Mercedes-Benz have ordered components worth $4.7m against this obligation.

In the event of non-achievement, the contract provides for liquidated damages as follows:

for each 1 per cent shortfall in Australian manufactured content-compensation $ 50,000

for each $1m or pro rata shortfall in offset-compensation $50,000.