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Wednesday, 11 October 1972
Page: 1417

Senator DRAKE-BROCKMAN (WESTERN AUSTRALIA) (Minister for Air) - As honourable senators will recall, 24 F4E aircraft were leased from the United States Air Force in 1970 to enable the Royal Australian Air Force to maintain proficiency and expertise in the strike role, pending a Government decision on the acceptance of the F111C. As the first F111C aircraft to Australia is expected in mid-1973, the F4E aircraft are no longer required for the purposes for which they were leased. The United States Air Force made a proposal that Australia purchase the F4Es and associated equipment offering them at a price substantially lower than that provided by the original lease terms. The Government's defence advisers have reviewed the possible advantages, the costs, industrial implications, and other factors bearing on a decision whether or not to retain the F4E aircraft.

In considering the additional capability that would be provided by the retention of the F4Es, a review was made of the forecast needs in the air defence and close support roles, and of the existing and continuing capabilities of the RAAF's Mirage 1110 and the Skyhawk aircraft of the Royal Australian Navy and the projected capabilities of new-generation aircraft that may come into service late in the 1970s or early 1980s. This review did not indicate a high strategic priority for acquisition of the F4Es now. In addition, the review took into account the special maintenance arrangements which would be required, the additional skilled manpower, spares, ground support equipment and other ancillary costs. The resulting overall financial effect on the 5 year defence programme would be substantially greater than the simple purchase price of the aircraft and leased items.

In parallel with the United States Air Force's purchase offer, the McDonnell Aircraft Company, which makes the F4E aircraft, made a conditional offer which could provide the Australian aircraft industry with the opportunity of participating in some offset work. This is an indication of the effectiveness of the Government's established policy on offsets, but it is assessed that retention of the F4Es could have effects on other industrial programmes now under consideration for which the McDonnell proposals would not compensate. After considering a detailed report on all these matters and bearing in mind the effects on the development of Australia's force structure as a whole, the Government has concluded that although the terms of the United States Air Force's offer are attractive, the total cost and other consequences could not be justified against other high-priority major items now included in the projections of the 5 year defence programme. The Government has therefore decided not to accept the proposal made by the United States Air Force.

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