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Thursday, 17 October 1974
Page: 1803

Senator DRAKE-BROCKMAN (WESTERN AUSTRALIA) -My question is addressed to the Minister representing the Minister for Defence. Has any change been made in the original order for the purchase of 75 light observation helicopters for Army operations? If a change has been made, what is it and why was such a change necessary? How will the change affect the final unit cost? Can the Minister say what was the original contract price, including all spares and associated items of cost, and what is the present estimate? When can it be expected that final delivery of these aircraft will be made?

Senator BISHOP - The subject matter of the question asked by Senator Drake-Brockman has been referred to in the Press. As the honourable senator knows, the production run was reduced from 75 helicopters to fifty-six. This decision was made, as the honourable senator knows, in the context of the last options in relation to defence requirements. The consequence of this is that the Bell helicopter company decided to abandon the production of helicopters for civilian use. That meant that there was a need to renegotiate the arrangements. The decision which was made offered a number of important savings to the Government. Although the original military program had some advantages in the sharing of overheads on a production run, the subsidy for the commercial program offset these cost advantages. When the decision was made the estimated subsidy had reached a substantial level. Because negotiations are at the present time being carried on between the Defence Department and the company concerned, I am unable to supply details of them. I shall endeavour to do so as soon as possible.

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