For the Prime Minister  from the Prime Minister.
I am transmitting to you the observations of the Australian Chiefs of Staff on the appreciation of the situation in the Far East prepared in March 1942 by the United Kingdom Chiefs of Staff and forwarded to the Commonwealth Government through the High Commissioner for the United Kingdom. 
War Cabinet and the Advisory War Council are in agreement with the views of the Australian Chiefs of Staff.  I would ask that very early consideration be given to the proposals for the adoption of an offensive naval policy as indicated in paragraphs 5 to 16.
1. Too great an emphasis is laid upon stabilising our present position rather than taking the initiative from the Japanese. Our policy should be not merely to strengthen the positions that we now hold with a view to retaining them, but to attack the enemy with a view to causing him to withdraw from positions that he has gained and which afford him opportunities for further advance.
2. The situation in the north east of Australia is a case in point. In our hands, Rabaul, which is the only good harbour in the New Britain-New Ireland area, was a base from which the enemy's strongholds and lines of communication in the Marshall and Caroline Islands could be threatened; in the enemy's hands, Rabaul is a base from which he can and does threaten Port Moresby, Fiji, New Zealand, New Caledonia, and the east coast of Australia. If our energies were devoted merely to strengthening the areas threatened by the Japanese from Rabaul, the enemy would be able to complete his preparations to make Rabaul into a strongly fortified base from which it would be difficult to dislodge him. It follows that defensive preparations in the areas threatened must be accompanied by offensive operations by air and sea designed to harass the enemy at present and pave the way for an attack to retake Rabaul. These preliminary attacks would also serve the purpose of containing the enemy at Rabaul and preventing further advances to the south.
3. Another case in point is Darwin. To our minds, the loss of the Netherlands East Indies does not render the holding of Darwin unimportant. If Darwin were properly defended and bomber aircraft and submarines based there, attacks could be launched against the enemy in the Netherlands East Indies which might contain the enemy in that area and prevent reinforcement elsewhere and would again prepare the way for an eventual offensive. Darwin is 1,500 miles nearer the enemy in the Netherlands East Indies than any base in the south west or the cast of Australia from which attacks could eventually be launched.
4. We would stress the need for combining offensive operations with the building up of the forces that are required to undertake a major offensive. Although we agree that it is unfortunately necessary to accept risks in the Middle East, we think that such a policy is justified only if the strength which is made available by diversions from the Middle East is to be used to undertake combined offensive operations against Japan. To do this, we consider that there must be concentrations of land and air forces both in Australia and in India.
5. We are not in entire agreement with the Naval policy advocated in the appreciation for two main reasons:-
(1) By dividing the Allied Naval Forces into two entirely separate fleets:-
one in the Indian Ocean (British) and one in the Pacific (United States), we delay the building up of a sufficiently strong force to defeat the Japanese Fleet at the earliest possible moment.
(Note: The statement in paragraph 10-'Allied Naval Forces in the Pacific may approach parity with the Japanese by mid-April'-is not understood.) (2) The British Fleet is allocated a purely defensive role in the Indian Ocean, whilst the United States Pacific Fleet is expected to carry out offensive roles in the Pacific.
(Note: The same policy was advocated in the A.B.D. conversations which took place at Singapore, and was criticised by the United States Naval Staff. ) 6. We therefore urge most strongly an offensive policy involving the formation of an allied force of British and United States naval units of sufficient strength to challenge the Japanese Fleet at any moment.
7. It is suggested this force should be composed approximately as follows:-
9 carriers 15 8 inch cruisers 24 destroyers + as many more as can be arranged 9 fast tankers (15-18 knots) Such a force would form a great mobile sea aerodrome, containing 400-500 aircraft with their own fighter cover and warning sets. It could move about where and when it liked, fuel under the lee of islands over which it had established air supremacy, and would be capable of taking on the strongest force that the Japanese could bring against it.
8. It will be noted that capital ships are not included in the above force as it is considered that these valuable ships should be kept well away from the battle area until the battle for air supremacy at sea has been won.
9. The above force could be conveniently divided into three tactical units, i.e., two American and one British, each consisting of:-
3 carriers 5 8 inch cruisers 8 destroyers or more 3 tankers.
Each unit will be entirely self-contained, and trained so that by itself it forms a most effective striking force.
10. The unit of three carriers is arbitrary and was chosen because:-
(1) Japanese air units have two carriers and therefore one of our units would be superior to theirs.
(2) It makes a better division of forces as between the United States and British.
(3) three carriers are a very convenient unit for fighter and reconnaissance patrols whilst cruising.
(4) Under certain circumstances, it may be advantageous to use the third carrier non-operationally, in order to carry reserve aircraft for the remainder.
11. Until the moment for concentration arrives, each tactical unit would operate in its own theatre and it is hoped that the units in the Pacific will take every opportunity of attacking Rabaul where the Japanese are rapidly consolidating themselves and forming a submarine base.
12. The tactical operation of a combined force of this nature should be flexible and yet well co-ordinated. The time and place for effecting a concentration will depend on circumstances, but the main object must always be borne in mind, i.e. to prepare and have ready at short notice a force of sufficient strength to defeat anything the Japanese can bring against it.
13. The most suitable operation for ensuring an engagement with Japanese naval forces would undoubtedly be raids on Japan, as advocated in the United Kingdom Appreciation, paragraph 10. Such raids in carefully selected places would cause panic amongst the population and inevitably draw Japanese forces in that direction and thereby relieve the pressure in other parts.
14. An operation of this nature could be satisfactorily carried out from Pearl Harbour, making use of Midway Island for fuelling.
A full scale rehearsal on Jaluit, Wotje, etc., might well be carried out before the major operation took place, and thereby assist in drawing the Japanese fleet in the right direction.
15. It is realised that the withdrawal of part of our forces from the Indian Ocean will weaken the protection of Ceylon and important sea communications for a time. The protection of the west and south west of Australia would also be weakened. This, however, could be accepted for the ultimate advantage gained by aggressive action against Japan itself, which would, it is anticipated, draw off the Japanese forces that are now available for further attacks.
16. In our opinion, therefore, it is necessary to use such forces as we have to attack the Japanese, with a view to:-
(1) paving the way for future offensive operations on a large scale;
(2) preventing them from consolidating their present positions;
and (3) preventing or hindering any further advances.