Canberra, 7 November 1966

Confidential

[matter omitted]¹

The sub-committee visited a number of important defence installations in the Territory including those at Manus and Wewak². These installations are of great importance in the existing circumstances to the defence of Papua New Guinea, to Australian national security, and to maintaining our strategic communications with Asia and through the Pacific.

The Government is fully aware of the particular importance of preserving the morale of the armed services and police in whom, we assume, will eventually be vested responsibility for defending and preserving the law and order of the Territory. For this reason, while the territorial defence forces must continue for a considerable time to be based on direction and training by Australian personnel, we envisage increasing participation by indigenes in the officer ranks as and when suitable personnel become available. Undue restriction of growth in local control of defence forces, which did not keep appropriate pace with constitutional developments, would appear unlikely to be conducive of real security in the short or long term.

Without wishing to enter into the merits of the matter of an air force for the Territory, which the sub-committee's report raises, I would suggest that for some time at least the financial implications alone would appear likely to inhibit the growth of any New Guinea controlled airforce of significance.

In general the Defence viewpoint is that our interests may be best served by the development of a cohesive population and administration including armed services personnel which will remain well-disposed towards Australia. To the extent that this is achieved, the institution of whatever new defence arrangements are appropriate to the future constitutional status of the Territory will be facilitated.

[NAA: A 1838, 93611/3]

Lapun's bill and the situation on Bougainville

Paul Lapun's bill¹ was passed on 25 November by 31 votes to 21, after a debate in which the official view was put strongly by both Watkins and A.P.J. Newman (Treasurer, PNG).² Both argued that the House should see the Bougainville problem in terms of the national good and therefore affirm state ownership of mineral deposits. The Administration later telexed DOT that most elected members had 'accepted that all of [the] community should benefit from mineral wealth', though there had been 'little acceptance that landowners had no rights to minerals at all'. ³ For his part, Lapun had tried to reassure members of the House who doubted that the proposed royalty would solve difficulties on the island:

I say to you that they will be content with 5 per cent. They will be happy ... I am a Buka man and I understand the Buka people ... they will be happy ... These people will be pleased with this five per cent and also pleased about the major portion of the royalties going to the Government to help it develop this country. This is a fact.⁴

The Department of Territories was disenchanted with the result. A telex from Ahrens to Gutman noted that 'Consideration [was] now being given in Government Branch to pros and cons of refusing assent or pressing amendments which would make the new ordinance more acceptable'. ⁵

Ballard subsequently proposed an amendment that would provide compensation to owners for damage or loss of land, with remuneration to be funded via royalties. Landowners would not, however, receive direct royalties from the extraction of minerals. ⁶ Ahrens objected to Ballard's plan, arguing, inter alia, that 'relevance of compensation for damage to the participation of landowners is unlikely to be understood by natives'; that 'Compensation for damage or loss of land is not all the natives want'; that 'there would be no funds available [for some time] for which to make compensation payments'; and it was 'inadvisable to so patently attempt to immediately reverse the decision of the House of Assembly'. ⁷

These arguments were accepted. Ballard prepared another alternative, asking on 13 December for the drafting of an amendment which would 'provide that Lapun's Bill applies only to communally owned land and communal and which has been converted to individual tenure ... it would not therefore apply to freehold, leasehold, Administration or submerged land'. ⁸ A second amendment was that royalty for each eligible landowner would be 'determined in proportion to the area of surface land owned'. ⁹ From the viewpoint of the Department and the Minister, the first amendment was essential because 'there may be only a small percentage of land alienated in the Territory, but there are nevertheless a substantial number of individual holdings [of alienated land] and the area is substantial in relation to the payments that could be involved if a commercial mineral deposit were to be discovered on alienated land'. ¹⁰ At the same time, the second amendment would, as Ballard expressed it, 'take no account of the amount or value of minerals extracted from anyone s land'¹¹ and was the 'only way of distribution which will not involve us in interminable argument'. ¹²

Acceptance of Lapun's bill with amendment was also seen as sound from a political perspective. Thus Ballard described to Swift a conversation with Grove and Henderson:

Grove said that there were a number of mixed motives in Lapun s Bill and we could not take it that the 5% was only intended as a sop to Bougainville. Other members had identified this with possible finds in their electorates and there would be very unfavourable reactions if [assent to the Bill was withheld.]

Grove's view with which Henderson agreed, was that we should stick to the recommended amendments ... I incline to this approach too. We are clearly going to have trouble in Bougainville and it will be best to have this with the House of Assembly behind us rather than against us. ¹³

On the ground, Territories believed there were increasing tensions between the Commonwealth, on one hand, and Bougainvillean indigenes and missionaries on the other. In November, Cleland had written to DOT of two articles in a Catholic publication that 'come close to inciting subversion ... [and] are probably the most inflammatory items on Administration and indigenous relationships yet published by a non-Communist organisation'. ¹⁴ In December, Ballard minuted Warwick Smith that 'opposition in the area of CRA operations is clearly hardening; and Paul Lapun's Bill is not having the slightest effect'–and he noted 'reports from Police sources which were causing ... concern'. ¹⁵

Barnes consequently wrote to Enrici of his 'real concern ... that the situation is potentially explosive and could lead to serious and ugly incidents between Conzinc Rio Tinto and the local people', and he complained that Lemay had supported Lapun's bill and yet it remained 'only too clear that one of the elements prompting opposition by the local people is the attitude of certain Roman Catholic Priests'. ¹⁶ Barnes suggested that the church send a representative with Administration officers to 'ascertain the true facts of the situation'. Further he claimed that 'a peaceful solution to the trouble will not be possible unless the positive and militant opposition ... being shown by some of the local priests is stopped' and he asked for 'advice regarding any action which you yourself could take or suggest that the Administration take'.

Concurrently, Warwick Smith cabled the Administration, stressing the Minister's concern

to ensure [the] situation ... is handled in [the] best possible way and that all possible steps are taken in advance to remove or mitigate legal opposition before any serious incident occurs ... [the] Minister's approach should be tackled in [the] following separate stages–

a. establish the facts on an authoritative basis at highest practicable official level

b. do everything possible to remove adverse activity of local missionaries

c. to offer every facility and opportunity to locals on the spot to be re-settled on land as good as the land affected or likely to be affected by the mining operation

d. at appropriate stage to bring the Administrator's Council into the picture (he thinks probably at its next meeting) and similarly with the House of Assembly for endorsement of steps to ensure that the mining operation goes forward (records of debate may already provide sufficient basis for this with respect to the House)

e. Having taken these steps and in particular having explained the royalty payment position, land rental and compensation payments, etcetera, and having offered resettlement, the mining operation would then have to go forward. ¹⁷

Enrici replied on 24 December that other Catholic bishops in PNG had no jurisdiction over Bougainville and that it was 'not customary' for the apostolic delegation to dispatch an envoy in such a situation. He could go no further than suggest that Bishop Copas might write to Lemay 'as a friend', while he (Enrici) would ask for a report from Lemay 'underlining the dangers ... and urging him to do all in his power to solve the difficulties'. ¹⁸

In the Territory, senior Administration officer T G. Aitchison was dispatched to Bougainville.

1 In matter omitted, Fairhall referred to Hasluck's letter of 7 July, which had asked for views on the Foreign Affairs Committee report (see Document 78). Fairhall requested that his comments be passed to the Committee chairman.

2 On defence and civil order, the Committee's report had asserted that because of possible disloyalty, Australia should maintain control of the army, police and any air force that might be created for as long as possible–and more broadly it was claimed to be of the 'highest importance for Australia to have a secure strategic base to cover the open flank exposed to Indonesia' (undated report by Joint Committee on Foreign Affairs, NAA: A1838, 561/6/10).

1 See paragraph 7, Document 69.

2 House of Assembly debates, 24 November 1966, NLA: Nq. 328.952 PAP, pp. 1945-6, 1949.

3 Telex 497, Cleland to DOT, 24 November 1966, NAA: A452, 1966/5530.

4 House of Assembly debates, 24 November 1966, NLA: Nq. 328.952 PAP, p. 1964.

5 Telex 379/C2824, Ahrens to Gutman, 28 November 1966, NAA: A452, 1966/5530.

6 This proposal, outlined in a minute to Warwick Smith, has not been found, but is inferred from minutes, Grigor to Ahrens, 6 December 1966, and Ahrens to Ballard, 7 December 1966, ibid.

7 loc. cit.

8 Minute, Ballard to Swift, 13 December 1966, NAA: A452, 1966/5311; also, Ballard to Evatt, 13 December 1966, ibid.

9 Telex 263/95, Warwick Smith to Hay, 13 January 1967, NAA: A452, 1967/1347.

10 Telex 284/201, Warwick Smith to Hay, 27 January 1966, ibid.

11 Minute, Ballard to Evatt, December 1966 (exact date unknown), ibid.

12 Minute, Ballard to Swift, 22 December 1966, appended to loc.cit.

13 loc.cit.

14 Memorandum, Administration (Cleland) to DOT, undated (received 14 November 1966), NAA: A452, 1966/5311.

15 Minute, Ballard to Warwick Smith, 22 December 1966, ibid.

16 Telegram, Barnes to Enrici, 23 December 1966, NAA: A452, 196711347.

17 Telex 288/1216, Warwick Smith to Henderson or Cleland, 23 December 1966, ibid. In a telex of the following day, Warwick Smith cautioned Henderson: 'use of force cannot repeat not be allowed in respect of the mining operation without explicit authorisation by [the] Minister and he will not repeat not authorise it without [these] steps ... having been put into effect and having himself studied the resulting reports' (telex 1197, Warwick Smith to Henderson, 24 December 1966, ibid.).

18 Letter, Enrici to Barnes, 24 December 1966, ibid.