{"id":"C2004A02416","name":"Airlines Equipment (Loan Guarantee) Act 1981","slug":"airlines-equipment-loan-guarantee-act-1981","collection":"act","jurisdiction":"commonwealth","status":"repealed","isInForce":false,"actNumber":"38 of 1981","makingDate":null,"administeringDepartment":null,"currentVersion":{"id":6742,"registerId":"commonwealth-C2004A02416-current","compilationNumber":null,"startDate":"2026-03-30","status":"Repealed","reasons":null,"registeredAt":null},"sections":[{"sectionNumber":"1","sectionType":"section","heading":"Airlines Equipment (Loan Guarantee) Act 1981","content":"![1.jpg](image.001.jpeg)\n\nAirlines Equipment (Loan Guarantee) Act 1981\n\nNo. 38 of 1981\n\nAn Act relating to guarantees of certain borrowings by a domestic airline\n\n\\[Assented to 21 April 1981\\]\n\nBE IT ENACTED by the Queen, and the Senate and the House of Representatives of the Commonwealth of Australia, as follows:\n\nShort title\n\n1. This Act may be cited as the Airlines Equipment (Loan Guarantee) Act 1981.\n\nCommencement\n\n2. This Act shall come into operation on the day on which it receives the Royal Assent.\n\nInterpretation\n\n3. (1) In this Act, unless the contrary intention appears—\n\n“Ansett” means Ansett Transport Industries Limited;  \n\n“relevant subsidiary” means a body corporate that—\n\n(a) is a wholly-owned subsidiary of Ansett; and\n\n(b) owns or operates, or is to own or operate, aircraft.\n\n(2) For the purposes of this Act—\n\n(a) the issue by a person of instruments acknowledging a debt in consideration of—\n\n(i) the payment or deposit of moneys; or\n\n(ii) the provision of credit,\n\nshall, to the extent of the amount of those moneys or of that credit, be deemed to be a borrowing by that person; and\n\n(b) the obtaining of credit by a person shall, to the extent of the amount of that credit, be deemed to be a borrowing by that person.\n\n(3) For the purposes of the definition of “relevant subsidiary” in sub-section (1), a body corporate is a wholly-owned subsidiary of Ansett if that body corporate is a subsidiary of Ansett and none of the members of that body corporate is a person other than—\n\n(a) Ansett;\n\n(b) a nominee of Ansett;\n\n(c) a subsidiary of Ansett, being a subsidiary none of the members of which is a person other than Ansett or a nominee of Ansett; or\n\n(d) a nominee of a subsidiary referred to in paragraph (c).\n\n(4) For the purposes of sub-section (3), the question whether a body corporate is a subsidiary of Ansett shall be determined in the same manner as the question whether a corporation is a subsidiary of another corporation is determined under the Companies Ordinance 1962 of the Australian Capital Territory as amended and in force from time to time.\n\nGuarantee of certain loans\n\n4\\. (1) Where—\n\n(a) a relevant subsidiary has entered into an agreement to borrow moneys; and\n\n(b) the Treasurer is satisfied that the moneys are for use in connection with the purchase by the relevant subsidiary of any of the following aircraft:\n\n(i) 12 Boeing 737 aircraft;\n\n(ii) 4 Boeing 727 aircraft;\n\n(iii) 5 Boeing 767 aircraft,\n\nor in connection with the purchase by the relevant subsidiary of related spare parts and equipment,\n\nthe Treasurer may, on behalf of the Commonwealth, at the request of Ansett, and subject to the conditions required by this Act, guarantee—\n\n(c) the repayment of moneys borrowed under the agreement; and  \n\n(d) the payment of interest (including any interest on that interest) on moneys so borrowed.\n\n(2) A guarantee or guarantees shall not be given under sub-section (1) in respect of moneys borrowed in the currency of the United States of America, or in any other currency, exceeding in the aggregate $490,000,000 in the currency of the United States of America.\n\n(3) For the purposes of sub-section (2), the amount of a borrowing in a currency other than the currency of the United States of America shall be taken to be the amount in the currency of the United States of America that was equivalent to the first-mentioned amount at the date of the borrowing, as ascertained by the Reserve Bank of Australia.\n\n(4) The power of the Treasurer to give a guarantee under this section includes—\n\n(a) a power to agree, on behalf of the Commonwealth, that proceedings under the guarantee may be taken in a court of a country other than Australia; and\n\n(b) a power to waive, on behalf of the Commonwealth, the immunity of the Commonwealth from suit in a court of a country other than Australia in relation to any proceedings that may be taken under the guarantee in such a court.\n\nConditions of guarantees\n\n5\\. For the purpose of the protection of the financial interests of the Commonwealth, the Treasurer shall not give a guarantee under section 4 in respect of a borrowing by a relevant subsidiary unless—\n\n(a) the Treasurer is satisfied that the terms and conditions of the borrowing are reasonable;\n\n(b) where the borrowing consists of, or includes, the issue of instruments—the issue of those instruments, and the form of those instruments, have been approved by the Treasurer;\n\n(c) appropriate security to the satisfaction of the Treasurer is, or is to be, given to the Commonwealth over the aircraft, spare parts and equipment to which the borrowing relates;\n\n(d) undertakings to the satisfaction of the Treasurer are given that the goods over which security is, or is to be, taken in accordance with paragraph (c)—\n\n(i) will be insured, and kept insured, to their full insurable value against all risks against which it is customary to insure;\n\n(ii) will not be sold or made the subject of a mortgage or charge having priority over the security given to the Commonwealth in respect of the guarantee; and\n\n(iii) will not be taken out of Australia for a destination that is not in Australia or a Territory except after the giving of such security as the Treasurer requires;  \n\n(e) undertakings to the satisfaction of the Treasurer are given that, so long as the whole or any part of the amount borrowed, or any interest on that amount, remains unpaid—\n\n(i) officers of the Australian Public Service will have full access at all reasonable times to the financial accounts of Ansett and of the relevant subsidiary when authorized in writing by the Minister for that purpose; and\n\n(ii) Ansett and the relevant subsidiary will do everything within their power to ensure that the officers so authorized have similar access to the financial accounts of any body, whether corporate or unincorporate, in which Ansett or the relevant subsidiary has, at any time, whether directly or indirectly, a controlling interest;\n\n(f) undertakings to the satisfaction of the Treasurer are given that any legal costs incurred by the Commonwealth in connection with the giving of the guarantee will be met by the relevant subsidiary; and\n\n(g) such other conditions as the Treasurer thinks necessary are fulfilled.\n\nDelegation\n\n6. (1) The Treasurer may, either generally or as otherwise provided by the instrument of delegation, by writing signed by him, delegate to an officer of the Department of the Treasury any of his powers or functions under this Act, other than this power of delegation.\n\n(2) A power or function so delegated, when exercised or performed by the delegate, shall, for the purposes of this Act, be deemed to have been exercised or performed by the Treasurer.\n\n(3) A delegate is, in the exercise or performance of a power or function so delegated, subject to the directions of the Treasurer.\n\n(4) A delegation under sub-section (1) does not prevent the exercise of a power or the performance of a function by the Treasurer.","sortOrder":0}],"analysis":{"summary":{"complexity_score":4,"scope_assessment":{"changed":false,"description":"This Act is tightly scoped and remains consistent with its original purpose throughout. It was enacted for a specific, narrow function — guaranteeing loans to an Ansett subsidiary for the purchase of a defined list of aircraft — and contains no amending provisions, no broadening clauses, and no ministerial discretion to expand the classes of eligible aircraft or borrowers beyond what is expressly listed. The cap of US$490 million and the enumerated aircraft types (12 Boeing 737s, 4 Boeing 727s, 5 Boeing 767s) serve as hard boundaries that prevent scope creep. There is no evidence of amendment or expansion beyond the original intent."},"complexity_factors":["Small number of defined terms (only 'Ansett' and 'relevant subsidiary'), but 'relevant subsidiary' has a multi-layered nested definition spanning four subsections","Recursive subsidiary definition that cross-references the Companies Ordinance 1962 (ACT) to determine corporate subsidiary status","Section 4 contains conditional logic: guarantee power is only triggered when multiple criteria are simultaneously satisfied (type of aircraft, type of borrowing, request by Ansett)","Section 5 has seven distinct conditions (a)–(g) that must all be met before a guarantee can be issued, with sub-conditions nested within several of them","Currency conversion mechanism in s.4(3) adds a computational and evidentiary layer (Reserve Bank ascertainment of USD equivalence at date of borrowing)","Sovereign immunity waiver provision (s.4(4)(b)) is legally unusual and conceptually complex despite being briefly expressed","Deemed borrowing provisions in s.3(2) expand the ordinary meaning of 'borrowing' to cover debt instruments and credit facilities, adding interpretive complexity"],"plain_english_summary":"## Airlines Equipment (Loan Guarantee) Act 1981\n\n**What this law does in a nutshell:**\nThis Act allows the Commonwealth (Australian federal government) to act as a financial guarantor (a backer who promises to repay a debt if the borrower can't) for loans taken out by a subsidiary (a company owned by another company) of **Ansett Transport Industries Limited** — at the time, one of Australia's two major domestic airlines — to purchase specific aircraft and related equipment.\n\n---\n\n**Who does it affect?**\n- **Ansett Transport Industries Limited** and its wholly-owned subsidiaries that own or operate aircraft\n- **The Commonwealth of Australia** (as the potential guarantor on the hook if loans aren't repaid)\n- **The Treasurer**, who holds the power to approve and issue guarantees\n- **Australian Public Service officers**, who gain audit access rights under certain conditions\n\n---\n\n**What exactly does it authorise?**\n\nThe Treasurer can, on behalf of the Commonwealth, **guarantee repayment of loans** (including interest) taken out by an Ansett subsidiary — but *only* if the money is being used to buy specific aircraft:\n- 🛩️ 12 Boeing 737 aircraft\n- 🛩️ 4 Boeing 727 aircraft\n- 🛩️ 5 Boeing 767 aircraft\n- Plus related spare parts and equipment\n\nThe **total guarantee cap is US$490 million** across all such loans combined.\n\n---\n\n**What conditions must be met before a guarantee is given?**\n\nThe Treasurer must be satisfied that a number of protections are in place before signing off on any guarantee:\n- The **loan terms must be reasonable**\n- The **aircraft and equipment must be used as security** (collateral — meaning the government could claim them if things go wrong) for the Commonwealth\n- The aircraft must be **fully insured** and kept insured at all times\n- The aircraft **cannot be sold or mortgaged** in a way that puts another lender ahead of the Commonwealth\n- The aircraft **cannot be taken out of Australia** without providing additional security approved by the Treasurer\n- **Government officers can inspect Ansett's financial records** (and those of related entities) at any time if authorised by the relevant Minister\n- Ansett must **cover the government's legal costs** associated with the guarantee\n- Any other conditions the Treasurer considers necessary\n\n---\n\n**Foreign courts and sovereign immunity:**\nIn an unusual but practical provision, the Treasurer can agree that legal disputes under the guarantee may be heard in **overseas courts**, and can even **waive the Commonwealth's usual immunity from being sued** in those foreign courts. This was likely necessary because some lenders (particularly US-based ones) would require disputes to be resolved in their home jurisdiction.\n\n---\n\n**Delegation of powers:**\nThe Treasurer can delegate their powers under this Act (in writing) to an officer of the Department of the Treasury — except the power to delegate itself. Any action taken by that delegate counts as if the Treasurer did it personally.\n\n---\n\n**Why does it matter?**\nThis Act was a direct government intervention to support the financial viability of Ansett at a time when Australian aviation was tightly regulated under a \"two-airline policy\" (a government-managed duopoly between Ansett and TAA). By guaranteeing major aircraft loans, the Commonwealth was essentially underwriting the modernisation of Ansett's domestic fleet, reducing the borrowing risk for lenders and making favourable loan terms accessible. If Ansett had defaulted, Australian taxpayers could have been left holding a bill of up to US$490 million."},"issue_detection":{"absurdities":[{"type":"circular_definition","section":"Section 3(3)","severity":"low","reasoning":"Section 3(3)(c) permits a body corporate to qualify as a wholly-owned subsidiary of Ansett if its members include 'a subsidiary of Ansett, being a subsidiary none of the members of which is a person other than Ansett or a nominee of Ansett.' To verify that the outer body is a wholly-owned subsidiary, you must first verify the subsidiary status of the inner body. The inner body's subsidiary status is itself determined under s3(4) by reference to the Companies Ordinance 1962 ACT, but the 'wholly-owned' purity requirement in s3(3)(c) must still be checked, and that check relies on the same definitional chain. While not a perfect loop (the Companies Ordinance breaks it for basic subsidiary status), the layered membership purity test in s3(3)(c)-(d) requires recursive verification with no stated termination condition, creating practical circularity.","confidence":0.65,"description":"The definition of 'wholly-owned subsidiary' is circular: it defines a wholly-owned subsidiary partly by reference to other subsidiaries of Ansett, whose own subsidiary status must also be determined — potentially creating an infinite regress of subsidiary verification."},{"type":"other","section":"Section 3(4)","severity":"medium","reasoning":"By adopting a living, ambulatory reference to external subordinate legislation (the ACT Companies Ordinance as amended from time to time), the Act effectively delegates to the ACT Legislative Assembly the power to alter the scope of Commonwealth guarantee eligibility. If the Ordinance is amended to broaden or narrow the definition of 'subsidiary,' the class of bodies that can benefit from Commonwealth guarantees changes automatically. This is not strictly an absurdity but is a significant drafting flaw — it creates an indeterminate and externally controllable scope for a Commonwealth financial commitment. Moreover, the Companies Ordinance 1962 ACT has long since been superseded by national corporations legislation, raising the question of what definition now applies.","confidence":0.82,"description":"Section 3(4) incorporates the Companies Ordinance 1962 of the Australian Capital Territory 'as amended and in force from time to time,' meaning the operative definition of 'subsidiary' within this Act is perpetually ambulatory and could change without any amendment to the Act itself — potentially expanding or contracting the class of 'relevant subsidiaries' eligible for guarantees without Parliamentary oversight."},{"type":"other","section":"Section 5(d)(iii)","severity":"low","reasoning":"The phrase 'taken out of Australia for a destination that is not in Australia or a Territory' is logically redundant: if an aircraft is taken out of Australia, its destination is by definition not in Australia (it may be in a Territory, which the provision carves out). The carve-out for Territories partially saves it, but the core logic is circular — an aircraft cannot simultaneously be 'taken out of Australia' and have a destination 'in Australia.' More substantively, the Act's very purpose is to finance aircraft for a domestic airline, but the condition as drafted would require the Treasurer's additional security approval before any international positioning flight or maintenance ferry, which may be operationally impossible to obtain in advance for routine operations.","confidence":0.7,"description":"The condition prohibiting aircraft from being 'taken out of Australia for a destination that is not in Australia or a Territory' is arguably impossible to comply with for international airline operations, and the phrase 'destination that is not in Australia or a Territory' is tautologically redundant."},{"type":"impossible_compliance","section":"Section 4(1)(b)","severity":"medium","reasoning":"The eligible aircraft are defined by exact number and type. If any one of the 21 specified aircraft is, say, written off before delivery, damaged beyond repair, or subject to a revised purchase contract, the replacement aircraft would not be covered by the guarantee power — even if it is an identical model. There is no provision for substitution. This creates a compliance impossibility where commercial reality (aircraft contracts frequently involve substitutions) cannot be accommodated within the Act's rigid numerical specification. The Treasurer would have no power to guarantee a replacement borrowing without amending the Act.","confidence":0.78,"description":"The Act specifies exactly 12 Boeing 737, 4 Boeing 727, and 5 Boeing 767 aircraft. The guarantee power is therefore legally extinguished the moment those precise aircraft are purchased — the Treasurer cannot guarantee loans for even one additional or substitute aircraft of the same type if, for example, a contracted aircraft is destroyed before delivery and must be replaced."},{"type":"other","section":"Section 5(e)(i)","severity":"low","reasoning":"Section 5(e)(i) grants access rights when officers are 'authorized in writing by the Minister.' The Act does not define 'the Minister' — presumably the Minister responsible for the Act (the Treasurer), but this is not stated. Section 6 creates a delegation regime from the Treasurer to Treasury officers. If the power to authorise access is not considered a 'power or function under this Act' for delegation purposes, or if 'the Minister' is read as a different minister, the access right could be administratively stranded. This is a low-level drafting ambiguity rather than a pure absurdity, but it could render a key protection mechanism unworkable.","confidence":0.55,"description":"Access to financial accounts is conditioned on written authorisation by 'the Minister,' but Section 6 allows the Treasurer to delegate powers to Treasury officers. It is unclear whether 'the Minister' in s5(e)(i) means the Treasurer or some other Minister, and whether delegation under s6 extends to granting such authorisations — creating potential for the access right to be practically unexercisable."}],"contradictions":[{"severity":"low","section_a":"Section 4(2)","section_b":"Section 4(3)","confidence":0.6,"description":"Section 4(2) sets an aggregate cap of $490,000,000 USD on guarantees and refers to borrowings 'in the currency of the United States of America, or in any other currency.' Section 4(3) then provides that non-USD borrowings are converted to USD at the exchange rate 'at the date of the borrowing.' This creates an internal tension: the aggregate cap is a fixed nominal USD figure, but the real-world value of that cap fluctuates with exchange rates for non-USD borrowings already counted toward it. A borrowing legitimately within the cap at drawdown date could, when aggregated with later borrowings converted at different rates, produce a notional total that obscures whether the cap has truly been reached — the Act provides no mechanism for re-calculating or adjusting the aggregate."},{"severity":"medium","section_a":"Section 5(d)(ii)","section_b":"Section 5(c)","confidence":0.72,"description":"Section 5(c) requires that 'appropriate security to the satisfaction of the Treasurer is, or is to be, given to the Commonwealth over the aircraft.' Section 5(d)(ii) then requires an undertaking that the aircraft 'will not be sold or made the subject of a mortgage or charge having priority over the security given to the Commonwealth.' However, section 5(c) permits the security to be future ('is to be') — meaning at the time the guarantee is given, Commonwealth security may not yet exist. During that interim period, section 5(d)(ii)'s prohibition on prior-ranking encumbrances is operative, yet there is no Commonwealth security in place to protect. This creates a window where the undertaking in (d)(ii) is protecting a security interest that does not yet legally exist, making the condition internally inconsistent."},{"severity":"low","section_a":"Section 6(1)","section_b":"Section 6(3)","confidence":0.5,"description":"Section 6(1) states the Treasurer may delegate 'any of his powers or functions under this Act, other than this power of delegation.' Section 6(3) states a delegate 'is subject to the directions of the Treasurer.' If the delegate is fully subject to the Treasurer's directions in all respects, then the delegation is substantively hollow — the Treasurer retains effective control, which partially negates the purpose of delegation. More critically, s6(3) creates a tension with s6(2), which deems delegate acts to be acts of the Treasurer: if the delegate must follow the Treasurer's directions, the delegate cannot exercise independent judgment, yet s6(2) attributes the act to the Treasurer as if it were the Treasurer's own decision. This conflation makes the delegation framework internally inconsistent as to where legal responsibility and decision-making authority actually reside."}]}},"importantCases":[],"_links":{"self":"/api/acts/airlines-equipment-loan-guarantee-act-1981","history":"/api/acts/airlines-equipment-loan-guarantee-act-1981/history","analysis":"/api/acts/airlines-equipment-loan-guarantee-act-1981/analysis","conflicts":"/api/acts/airlines-equipment-loan-guarantee-act-1981/conflicts","importantCases":"/api/acts/airlines-equipment-loan-guarantee-act-1981/important-cases","documents":"/api/acts/airlines-equipment-loan-guarantee-act-1981/documents"}}