THE AUSTRALIAN WAR EFFORT

1. The purpose of this memorandum is to state the broad position
confronting the Commonwealth Government in regard to the nature
and extent of the Australian war effort. This effort is, of
course, primarily based on the strategical plan in the South West
Pacific area which is a part of the general scheme for the defeat
of Japan.

2. Australia, in addition to maintaining Forces of considerable
strength in the South West Pacific area, as well as continuing its
part in the Empire Air scheme and manning certain ships for the
Royal Navy, has accepted responsibilities for the provision of
works, supplies and services for the American Forces as well as
its own. It has also to maintain the civil economy on certain
austerity standards, and to meet commitments for the supply of
foodstuffs to the United Kingdom to assist in the maintenance of
the rations of the British people.

3. The following was the distribution of Australian manpower in
December, 1943:

Per cent
Navy, Army and Air Force 26
Munitions industries 14.7
Other essential industries 30.7
Total for direct war activities 71.4
Less essential industries 21.7
Other 6.9
100.0

An indication of the degree to which the national effort has been
concentrated on direct war activities is to be obtained from a
comparison between the figures for the United Kingdom and
Australia. in the case of the United Kingdom 75.1 per cent of its
manpower is absorbed in direct war activities; the figure for
Australia is 71.4 per cent.

4. As Australia does not possess the manpower and material
resources to meet all the demands being made upon it, I discussed
our problem with the Commander-in-Chief, South West Pacific area
in December, 1943. General MacArthur fully agreed with the action
contemplated by the Government to provide for the following
needs:-

(a) The additional manpower necessary to sustain the level of
activity in a number of basic industries on which the Australian
direct military effort ultimately depends (transport, power,
timber, minerals, food, clothing, etc.), in order to ensure a
proper balance between the direct military programme and its
industrial basis.

(b) Certain further requirements of manpower for the production of
food for Britain, and of food and general supplies for the rapidly
growing Allied Forces in Pacific Areas.

5. While in London I discussed with Mr. Churchill the question of
the additional demands likely to be made on Australia when British
Forces are brought into the war against Japan. [1] I agreed to a
proposal by Mr. Churchill that British Staff Officers should be
integrated into the Australian Staffs for the preparation of a
report on the potentialities of Australia as a base. Mr. Churchill
emphasised that this study will be made without any commitment on
the part of the United Kingdom Government that the forces will be
based on Australia, the latter aspect being reserved for later
decision in the light of the military position when the forces
become available.

6. Nevertheless, it is essential that the Commonwealth Government
should have before it some broad ideas to govern its policy in
regard to the Australian war effort. Australia can only maintain
additional forces by adjusting her war effort in some other
direction. The Government will be quite prepared to do this
provided the Australian military effort is not permitted to fall
below a certain point. Furthermore it is presumed that if
strategical considerations indicate that additional forces should
be sent to Australia, the resources of the United Nations will be
capable of making good deficiencies which cannot be supplied by
the Commonwealth.

7. Though a decision on the basing of British Forces on Australia
is not possible at present, I pointed out to Mr. Churchill that
the Australian Government would like a general view on the
desirability of Australia proceeding with the measures necessary
for supply and maintenance, in view of the fact that the resources
can be absorbed in other directions in the war effort of the
United Nations. A precise assessment of what Australia is capable
of doing can then be worked out. The decision as to the nature and
extent of its war effort is of course a matter for the Australian
Government.

8. The following conclusions were reached by Mr. Churchill and
myself:

(i) The Australian war effort should be on the following basis:-

(a) the maintenance of six divisions for active operations.

(b) the maintenance of the Royal Australian Navy at its present
strength plus additions arising from the Australian naval
construction programme.

(c) the maintenance of the Royal Australian Air Force at the
strength of 53 squadrons to be achieved under the present
programme by December, 1944. This excludes:

3 R.A.F. squadrons in Australia
2 N.E.I. squadrons in Australia
2 Permanent R.A.A.F. squadrons serving overseas.

R.A.A.F. E.A.T.S. squadrons and personnel serving overseas.

(d) food for Great Britain (including India) to be exported on the
1944 scale.

(ii) In the light of the strengths laid down for the Forces, the
Commonwealth Government will review the extent and nature of other
aspects of the Australian war effort. This will enable it to
assess what can be done for the supply and maintenance of British
Forces which may be based on Australia, in addition to the present
similar commitments for the United States Forces. As demands will
exist somewhere for supplies that could be produced, it may be
feasible to go ahead with increased production. For example, if
increases in food production should not be required for United
Kingdom Forces, they could be sent to the United Kingdom or the
ceilings at present imposed on the United States Forces could be
raised to some degree.

Mr. Churchill emphasised that agreement to this action does not
imply any commitment or the adoption of any specific plan for the
basing of British Forces on Australia.

9. As Australia is in a sphere of American strategic
responsibility, Mr. Churchill agreed that I should discuss the
matter in Washington.