PRESENT Admiral Sir Ragnar Colvin, Chief of the Naval Staff Lt Gen V. A. H. Sturdee, Chief of the General Staff Air Commodore W. D. Bostock, Deputy Chief of the Air Staff Essington Lewis, Director-General of Munitions F. R. Sinclair, Assistant Secretary of Department of Defence Co- ordination The following were also present:
Sir Walter Massy-Greene, leader of the Australian delegation to the Eastern Group Supply Conference Maj Gen J. Northcott, Deputy Chief of the General Staff N. K. S. Brodribb, Deputy Director-General of Munitions
AGENDUM No. 68/1940 (SUPPLEMENT No. 2) 
ESTABLISHMENT OF EASTERN GROUP SUPPLY COUNCIL The Defence Committee considered the recommendation of the Eastern Group Conference, summarised in cablegrams of 28th November  and 11th December  from the War Board, New Delhi, in regard to the co-ordination of supply arrangements and the establishment of an Eastern Group Supply Council, and also Dominions Office Cablegram 467 of 4th December , in which it is advised that the United Kingdom Government are prepared to accept in principle the setting up of the Council.
2. The recommendations of the Conference for the co-ordination of supply in the Eastern Group are summarised in the attached statement.  The following is an outline of the proposals regarding the establishment of an Eastern Group Supply Council:-
The Eastern Group Supply Council is to consist of:A Chairman appointed by the United Kingdom Government Representatives of Australia, New Zealand, South Africa and India The representative of the Chief of the Imperial General Staff, in charge of a Central Provision Office, which is to be established in India.
The Council will deal primarily with demands for military provisions placed by the Central Provision Office. It is to have power to purchase, to hold stocks, and to call for information with respect to the supply position in participating countries. If possible, it is also to have power to make arrangements for new production. Outside the field of military provisions, it will act as a clearing house of information on supply matters, and should be prepared to advise about problems of essential civil needs. It will need authority to incur financial commitments for forward buying, purchase and storage of output of small suppliers and purchase and storage of goods for stock. Such funds should be provided by the United Kingdom Government in the first instance, subject to recovery from participating Governments.
Basis of Proposals of Conference 3. Sir Walter Massy-Greene submitted to the Committee the following information as to the discussions and conclusions of the Conference regarding the co-ordination of supply arrangements:-
(a) Discussions at the Conference had revealed that there was a pressing need for the co-ordination of supply arrangements in Eastern Group countries, primarily to ensure that the requirements of the Military forces in the actual and possible theatres of war in the Group were promptly and adequately met and the best use was made of the available resources. At present, each country was working on its own initiative with little or no co-ordination and there was endless confusion and waste of effort. It was proposed to set up five separate Military provision offices in the Group, one for each possible theatre of war, which, for the purposes of provision, are defined as follow[s]:-
(1) South African Group including Kenya and Uganda (2) Sudan, Egypt, Palestine and Syria (3) Iraq, India and Burma (4) Malaya (5) Hong Kong Each provision office is to be responsible for formulating its demands and sending them to a Central Provision Office, which is to be established in India.
(b) The internal provision offices of Australia and New Zealand will continue to arrange their own internal requirements and have a first call on their production. They will indent on the Central Provision Office only for such articles as cannot be supplied locally.
(c) The Conference considered it essential that the requirements of all the theatres of war should be collected by one central authority, who will be in a position to know the total requirements of the fighting forces in the Group. It is for this reason, primarily, that a Central Provision Office is being set up. The Office will be in charge of a representative of the Chief of the Imperial General Staff and will be entirely independent of the Government of India.
(d) The Central Provision Office will place firm demands for both immediate and future requirements on the Eastern Group Supply Council, which, as the Supply authority, will arrange to have them met through the Supply Departments of the individual countries or from sources outside the Eastern Group. (Note: The constitution and functions of the Council are summarised in paragraph 2 above.) The Central Provision Office and the Council are to be separate organisations, but the Military Officer in charge of the Central Provision Office is to be a member of the Council. This will ensure effective liaison between the two organisations. (e) There are a number of matters in respect of which a definite understanding had still to be arrived at, e.g:-
(a) Drawing upon surpluses (b) Initiating new production (c) Placing orders outside the Eastern Group (d) Finance It was agreed at the Conference that these could be settled by mutual agreement between the participating Governments.
4. Sir Walter Massy-Greene considered that Australia would have everything to gain and nothing to lose by participation in the proposed organisation. The staffing of the organisation will present some difficulty and in his view the success or failure of the whole scheme depended largely on the provision of an efficient staff As some time must elapse before the organisation could function effectively, it was important that a nucleus staff should be provided immediately so that preliminary work could be undertaken at once, and the outstanding matters resolved as soon as possible.
Conclusions of Defence Committee 5. The Defence Committee recommend that the Government agree in principle to the setting up of an Eastern Group Supply Council. As stated in Dominions Office telegram 467, however, the precise scope of the Council's responsibilities and methods of operation require further consideration by the participating Governments and the United Kingdom Government.
6. There are a number of important questions of principle involved in the matters not finally determined (see paragraph 3 (e)), but the Committee note and accept the view of the United Kingdom Government that, whatever may be the outcome of the consideration of these matters, there will be a wide field in which the Council could effectively operate. The need for early action for the establishment of a nucleus organisation is evident, and the Committee would emphasise, in this connection, the importance of the provision of a competent staff which, as mentioned by Sir Walter Massy-Greene, might very well be the determining factor in the success or failure of the whole scheme.