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Wednesday, 13 November 1974
Page: 2312

Senator WRIEDT (Tasmania) (Minister for Agriculture) - I move:

That the Bill be now read a second time.

I seek leave to have the second reading speech incorporated.

The DEPUTY PRESIDENT (Senator Webster)- Is leave granted? There being no objection, leave is granted. (The document read as follows)-

This Bill seeks the approval of Parliament to borrowings by Australia not exceeding the equivalent of $US91m ($A69.5m) to assist Qantas Airways Limited in financing the purchase of its ninth, tenth and eleventh Boeing 747 jet aircraft, spare parts and related equipment at an estimated cost of approximately $US 114.5 m ($A87.5m). The ninth aircraft was delivered last month and the other 2 aircraft are due to be delivered in May 1975 and November 1975, respectively. Australia has already arranged loans totalling $ US 164m ($A125.3m) to assist Qantas in financing the purchase of its first 6 Boeing 747 aircraft. These loans were approved by the Loan (Qantas Airways Limited) Act 1968, the Loans (Qantas Airways Limited) Act 1971, the Loans (Qantas Airways Limited) Act (No. 2) 1971 and the Loans (Qantas Airways

Limited) Act 1972. The borrowings arranged under the authority of the last Act were applied to the financing of the sixth aircraft. The seventh and eighth aircraft were financed by Qantas from its own internal resources.

The overseas borrowings on behalf of Qantas are specialised financing arrangements related to the particular requirements of the airline for the purchase of aircraft overseas and are in a different category from other borrowings by Australia overseas. A central element in the financing arrangements has been the participation in them by the Export-Import 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. The Export-Import Bank has agreed to finance 30 per cent of the cost of the tenth aircraft and has agreed to Australia obtaining finance for a further 10 per cent of the cost from Private Export Funding Corporation, an Export-Import Bank guaranteed source sponsored jointly by the U.S. Government and leading U.S. commercial banks. It is hoped that a similar commitment will be available for aircraft number eleven.

The current lending terms of the Bank for aircraft finance are interest at the rate of 7 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. These terms are, however, currently under review by the Bank and they may be less favourable for future loans. Since a firm order for aircraft number nine was placed before it was decided recently to revert to making use of overseas sources of finance for the purchase of capital equipment by the Australian Government transport authorities, finance from the Export-Import Bank is not available. Offers have been sought for this finance and negotiations are currently taking place. Other arrangements for the loans will be similar to those approved by Parliament for previous loans for Qantas and TAA in recent years. In particular, the Australian Government 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 8 of the Bill. These terms and conditions will be identical with those under which the Australian Government itself borrows the money. The airline will be required to meet all charges under the loan agreements. Consequently, the Australian Government 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 Loan Council. The amount to be borrowed is included in the Australian Government's loan program for 1974-75 approved by the Loan Council in June 1974. 1 commend the Bill to honourable senators.

Debate (on motion by Senator Withers) adjourned.

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