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F16 Deal Pullout A Cheap Option

A Treasury report to be given to the Government today is expected to show the abandoning the cost of the F16 lease deal with the United States will cost New Zealand nothing.

The report examines the cost of abandoning the $700 million deal to lease 28 F16 fighter jets from the United States made by the previous National Government.

To enter the deal New Zealand Government paid a thirty million dollar bond part of which would be surrendered if New Zealand left the deal.

So far $7 million of the bond has been spent. But now, thanks to changing currency exchange rates in New Zealand’s favour, this sum will be negated and abandoning the deal could even see New Zealand getting back more than it paid.

Also to be given to the government today is a report from defence expert, and former ACT party MP, Derek Quigley on the F16 deal.

The report is expected to advocate abandoning the leasing of the F16s because it is not in tune with New Zealand’s current defence priorities. The Prime Minister has advocated instead spending the money on the upgrading equipment for New Zealand’s land defence forces.

However the Prime Minister will be out of the country next week, leaving March 20 the date the Cabinet is likely to decide on the deal. That said, the PM has also raised the possibility that the cabinet may meet earlier, if necessary, to make a decision

The last National Government raised defence spending by $500 million. Labour has pledged that it will not cut the defence budget.


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