217 Shedden to Burton

Letter 10 September 1947,

TOP SECRET AND PERSONAL

JOINT INTELLIGENCE ORGANISATION

It has not been possible to reply earlier to your letter of 15th August owing to various other matters, including attendance at the recent Conference on the Japanese Peace Treaty.

An Alternative Plan 2. I would refer to the following passage in your letter:-

'It is true that, at the Prime Ministers' Conference at London, it was agreed that we should move forward along the lines you are suggesting. Since that time, however, there have been remarkable, and even dramatic, changes in international affairs, and, in particular, in British Commonwealth relations. The inclusion of two new dominions in India and of Ceylon and Burma in the British Commonwealth Organisation is sufficient reason for reconsidering British Commonwealth defence arrangements.'

3. Viewing the international position from the defence aspect, I would say that the Government's recent statement on Defence policy fully confirms the importance of proceeding with this project as originally approved.

4. I do not understand what bearing the creation of the Dominions in India, Pakistan, Burma and Ceylon, has on this proposal, beyond the general aspect of requiring co-operation in British Commonwealth Defence to be established between a greater number of parties than previously.

5. Your statement about an independent intelligence organisation indicates a lack of knowledge of the evolution of the development of the sovereign control of Australian Defence Policy concurrently with the development of measures for greater co-operation in British Commonwealth Defence. This Policy dates from the establishment of a Royal Australian Navy and an Australian Citizen Army in 1910, and is too long a story to be traversed in a letter.

However, I enclose a memorandum on Co-operation in British Commonwealth Defence which received the endorsement of War Cabinet in December 1945, and which commences from the Imperial Conference of 1923.

6. To bring the enclosure up to date, it is necessary to include the statement by the Prime Minister in London in 1946 that Australia must take a greater share in the burden of British Commonwealth defence in the Pacific, and that the responsibility for the development of regional defence in the Pacific must be assigned to the Australian Government Machinery. To provide liaison between the Australian Defence Machinery and that of the other parts of the Empire, invitations have been extended to the United Kingdom, Canada, New Zealand, South Africa, India and Pakistan, to accredit Service Liaison Officers to the Defence Department. Consideration will no doubt be given later to extending similar invitations to Burma and Ceylon when the question of the mutual relation of defence measures arises. The trend of Australian Defence Policy and the machinery for its administrative control has always been, and still is, in full accord with the constitutional considerations in British Commonwealth relations to which you refer.

7. In accordance with the Prime Minister's statement to undertake a greater commitment in British Commonwealth Defence in the Pacific, it was agreed that Australia would establish a Joint Intelligence Bureau for the Pacific Area. It is part of the Australian Government Machinery and will be entirely controlled by Australia. The area covered by its activities does not embrace India, Pakistan, Burma or Ceylon, and I do not see how they come into the picture.

8. The Defence Signals Bureau is a Centre in Melbourne, and a series of Intercept and Direction Finding Stations which are part of the British Commonwealth Global Organisation, of which the main Centre is in London. With our limited resources, it could not function on any other basis, and with the mutual exchange of information, we will get the benefits of the whole organisation.

It will be a self-contained unit so far as the main tasks on which it is engaged, are concerned. It could be expanded rapidly in an emergency to take the work of another Centre, if needed. [1]

9. It is noted that your Department would find the greatest difficulty in fully cooperating in a joint scheme as at present proposed. The primary consideration in this scheme is the defence and security of Australia and the British Commonwealth. The importance of intelligence organised on these lines was demonstrated during the war to be vital to victory, and it is a matter for decision, in the last resort, by those who are responsible to the Australian people for their security.

Scope of the Joint Intelligence Bureau 10. My comments are:-

(a) We have already made it clear that the Joint Intelligence Bureau is not to be a political reporting agency, that it will not disseminate political intelligence, and that political appreciations are not within its province; further, that we rely on External Affairs to supply the Joint Intelligence Bureau with such information on current political developments as it requires.

Presumably, it is the function and custom of External Affairs to keep other Departments informed, as necessary, of current overseas political developments, and surely there can be no 'great danger' in this.

(b) It is not the function or intention of the Joint Intelligence Organisation to inform other members of the British Commonwealth of 'our own judgment of current political developments in countries in this area'. The only political information contained in Joint Intelligence Bureau publications will be in respect of aspects of constitutional and political structure of various countries, some knowledge of which is necessary, for military purposes. This information is not secret, and we have already said we look to External Affairs to produce it for us.

Instructions and Regulations 11. As Permanent Head of the Defence Department, it seemed reasonable to me to comply with the formalities relating to security, if I wanted information about the organisation and its work, and I did so. [2] The Instructions and Regulations are explanatory and general instructions and regulations, to ensure the security of Signal Intelligence. From my experience in the requirements of safeguarding secret information, I consider them reasonable, and they are being reviewed for Australian application. It seems obvious: that we can only share in the results of this world organisation if we agree to be bound by the common security principles designed to protect the existence and source of Signal Intelligence.

Communications 12. From your comments, it would appear that you have the impression that the Joint Intelligence Bureau will be entirely pre-occupied with current political reporting, which is not its function. The great bulk of material we expect to get from British sources will deal with aspects of Military Geography, Topography, Ports, Harbours, Airfields, Communications, etc.

13. As regards means of communication, I cannot comment on the need of External Affairs for its own system of communications, which is entirely another matter. It is pointed out, in relation to Signal Intelligence communications, that:-

(a) Signal Intelligence is essentially a specialised Signal Organisation with a directing and processing centre.

(b) [3] It would not be practicable to use an Australian governmental system for this purpose.

(c) The Signal Intelligence Organisation is not setting up a new and independent system of overseas radio communications, as you seem to imply. It will use available groupage or channels on existing or projected Empire Service circuits.

(d) I cannot agree that a decision on the Signal Intelligence Organisation can or should await a review of governmental communications, which is another matter.

Location 14. An intelligence organisation exists as an essential source of information for those responsible for planning in peace and for the control of operations in war. Since the Defence and Service Departments are in Melbourne, the intelligence organisation must be there. As the Departments to which you refer are in Canberra, it would negate the primary purpose and use of the intelligence organisation to locate it in Canberra, to be alongside Departments which are sources of intelligence information. While it is obvious that it would be better for all concerned to be located in the one place, the fact is that they are not.

General Comment 15. I would refer to the following passage in your letter:-

'We are entering into a phase in international relations when, for security reasons, we must pursue positive policies, and, in my view, the proposals as put for-ward will embarrass the Government in doing this.' I know of no more positive policy that the Government is pursuing for security reasons, than its recently announced Defence Policy, of which the Joint Intelligence Organisation is an important and integral part. You do not offer any explanation as to how it will embarrass the Government in any other direction. I am afraid that you have not given sufficient weight to the fact that the Joint intelligence Organisation is concerned with military intelligence and not political intelligence. Your fear that it will intrude into the latter field, is, in my opinion, groundless.

1 Three sentences here omitted in accordance with Section 33(1)(a) of the Archives Act 1983.

2 Button had refused to undergo security briefing procedures.

3 One sentence here omitted in accordance with Section 33(1)(a) of the Archives Act 1983.

[AA: A5954/10, 848/2]