My understanding was that the Australian decision to go with the AUG was based on the licensing deal which was either better than for the M16a2 one or licensed production was not available to the Australians for the M16a2.My weapon of choice in the mid 80s is to jump in with the Canadians and licence build the C7 and C7A1
Maybe the Aussies and Kiwi's could jump in as well instead of the F88
The timing is about right
New Zealand selected the M16a2 to replace the SLR, M16a1,and Sterling SMG, but due to the changing relationship* between NZ and USA were told that they could no longer get them through FMS and would have to pay full price so New Zealand changed it's mind and ordered AUGs from Australia**.
* New Zealand's Anti-Nuclear policy of the recently elected Labour Government.
** Although some New Zealand AUG Carbines (actually Para variant) were made in Austria.