UKNA: DEFE 11/637

British High Commission, Canberra, 8 December 1964

12. Confidential

Australia: Defence,

In my despatch No. 6 of 3rd July I reported to your predecessor that the Australian defence measures proposed in the Review made on 18th June should not be regarded as entirely inadequate provided that the Government intended them only to be a preliminary step towards more realistic decisions in the future. I now have the honour to report that the Prime Minister, Sir Robert Menzies, made a further Defence Review to a crowded and expectant House of Representatives on 10th November. Details of the major measures proposed have already been reported to you by telegram and copies of the full statement have also been sent to you.

2. For months Australian military preparedness, or the lack of it, has rarely been out of the news. All three Services have been constantly under criticism and, in particular, the navy, since the loss of H.M.A.S.Voyager² and the consequent publicity during and after the holding of a Royal Commission, has been severely lambasted. I have already reported in my despatch No. 9 on these events and on the navy itself. This campaign, combined with recognition of the long-term threat from Communist China, the shorter term threat from Indonesia and the immediate problems in Viet-Nam, Laos and Malaysia, has made even the most complacent Australian contemplate uneasily the bleak future of a weak and isolated Western State in this region. Public opinion in this country is not particularly well-informed but it is gradually coming to realise that Australia needs defence forces which are a measure of her determination to defend herself, which are strong enough to help friends in need, which provide a degree of deterrence to a potential aggressor and which command respect from her allies.

3. It has been common knowledge that the Service Departments were under instruction to prepare urgently recommendations for a thorough-going Defence Review for Cabinet consideration before Parliament went into recess in early November. Conjecture and speculation filled the Press. There was therefore no great surprise when Sir Robert Menzies announced the following measures:

(1) Selective compulsory service for the army beginning in 1965 to bring its effective strength up to 33,000 by December 1966 by a ballot of bachelors aged 20. 4,200 youths will be called up in 1965 and 6,900 annually thereafter. They will serve for two years with regular units at home and overseas and then be on reserve for three years.

(2) Two more battalions for the army, raising the total to six; and the establishment of a new battle group in Queensland.

(3) The Special Air Service Regiment to be doubled to provide a headquarters squadron and four squadrons.

(4) Additional battalions and greater flexibility for the Citizen Military Forces.

(5) The Pacific Islands Regiment to be increased to three battalions, and a total strength of 3,500 by June 1968.

(6) The purchase of additional army equipment valued at about £A75 million over the next three years.

(7) A £A2 million submarine base near Sydney.

(8) Modernisation of the aircraft carrier Melbourne at a cost of £A 10 million in 1967 and the two Daring class destroyers at a cost of £A13 million.

(9) Purchase of 14 American S-2E Tracker anti–submarine aircraft for the R.A.N.

(10) Acquisition of £A10 million fleet replenishment ship, two minesweepers and 14 patrol craft.

(11) The purchase of 10 Lockheed Orion anti-submarine aircraft.

(12) The purchase of 12 C-130E medium range transport aircraft and the increase of the R.A.A.F. transport element from two to three squadrons.

(13) The purchase of 75 pure jet training aircraft, 10 dual-seat Mirage trainers and eight training aircraft for navigation and signaller training.

4. Of these measures the most interesting and important is the introduction of selective compulsory military service for the army. Conscription has long been under consideration although as recently as October the Minister for the Army somewhat rashly stated in public that it would be against the interests of the Regular Army for officers and n.c.os. to be sidetracked to conscript training. It was however obvious that, if the Government determined on major increases in military strength, the voluntary system would be unable to produce an adequate supply of recruits. To have introduced home service conscription would have been courageous. The introduction of compulsory liability for overseas service is a mark of real earnestness for it constitutes a complete break with previous Australian thinking. Even in the dire days of 1943 Australian conscripts were not allowed to serve north of the Equator.

5. There is, however, an element of political shrewdness in this decision. The Senate elections were due on 5th December and it became apparent that defence would be a major issue, on which I have reported separately in my despatch No.11. Sir Robert Menzies, by making conscription the major controversial issue, no doubt calculated that he could draw Opposition attacks to the point where he is strong and deflect them from the point where he is weak (i.e., the parlous state of Australia's defences). 'No conscription for overseas service' is a deeply engrained slogan in Labour thinking and it is an emotional issue; at the time of writing the Australian Labour Party seems to have fallen into Sir Robert Menzies' trap. The debate over the National Service Bill was rugged and showed once again that the Australian Labour Party, even now, is not ready to face the disagreeable facts of Australia's exposed and perilous position and prefers to stand on a 'principle' rather than to adopt a constructive platform which would indicate to the electorate that the international situation in South-East Asia constitutes a grave threat to Australia.

6. Whatever the political aspects may be, and whether or not these tactics will prove successful is immaterial in this despatch. Nor would it be fair to regard the Government's proposals as dictated primarily by electoral considerations. What is important is that the Government has publicly recognised the threat to Australia, the value of her allies and the importance of a Commonwealth base in South-East Asia, and the National Service Act, since passed to implement the Government's proposals, seems a practical, realistic and fair method of obtaining the men required for the enlarged army.

7. The remaining army measures are satisfactory, although until the selective service scheme becomes fruitful around 1967, the army will have even fewer formations ready for immediate operations than at present. The officer strength is now about 300 below establishment. Until compulsory service officer cadets complete their O.C.T.U. training, this shortage is likely to continue. The inability of the army to mount and maintain operations overseas quickly will also continue although the allocation of a squadron of Lockheed medium transport aircraft will provide rather greater flexibility.

8. The navy has once again come bottom of the class. In my despatch No.9 of 19th October I reported that the Navy Board did not enjoy the full confidence of the politicians, was suffering internal disagreement over the nature of the navy itself and tried to spread its limited butter over too many slices of bread. The Board, harassed by events since February and held in no high regard by the Prime Minister, got low marks for its apparently unconvincing and hurriedly prepared recommendations for naval requirements. Once again a bid was made for a new aircraft carrier Melbourne. I am advised that there is, in fact, doubt about the practicability of a new carrier and, in the event, this bid was struck out together with the recommendation for an extra American Charles F. Adams destroyer and four more frigates. The failure to obtain extra escort vessels is disappointing. The Australian Navy to all intents and purposes will not have an offensive strike weapon and will have a strictly limited ability to fulfil its escort role. It will, however, have a satisfactory anti-submarine weapon when the new Tracker anti-submarine aircraft become available and the modernisation of Melbourne is completed. This will not be for some years.

9. The air force, on the other hand, can view the measures with some satisfaction for it has obtained most of its recommendations. A third F-111 squadron was not approved but it is believed that this will be forthcoming when the R.A.A.F. is ready to absorb it. Of the airfields to be improved, Cocos and Learmonth (North-West Cape) are of particular interest to us. Airfields in Papua/New Guinea are also to be developed which will add to the flexibility of the forces and the mobility of the R.A.A.F. with its additional transport aircraft. Nevertheless the R.A.A.F. with its 100 supersonic Mirage fighters unsuited to ground support, without modem surface-to-air missile units and with only two mobile control and reporting units, will still remain unbalanced, both as an independent fighting force and in a role complementary to its allies. The relative success of the air force reflects the rather healthy public image that the R.A.A.F. has in comparison with the other two Services. It ignores, however, the fact that Australia is admirably suited to 'point defence' missiles and not well suited to defence by fighters.

10. Until we know approximately how much of the new allocations will be spent on the purchase of equipment from overseas and how much on home production it will be hard to make an accurate assessment of the economic effects of the new programme. The level of defence spending, estimated at £A296 million for this year, will rise to £A370 million in 1965–66, £A421 million in 1966–67 and £A429 million in 1967–68. These estimates assume that prices will remain static. In the interests of speed and of minimising inflationary pressures it would be logical for Australia to buy as much as possible from overseas. We already know that America and France will benefit. Britain has a chance in the jet trainer field and in the field of army equipment. On the other hand the Government will wish to strengthen the capacity and range of the Australian defence industry and have a special interest in providing work for the hitherto under-employed shipyards. It is certain that a substantial proportion of the increased Budget will be spent at home, making heavy calls on the already heavily burdened engineering and construction industries. The call-up will aggravate the labour shortage. Private industry may well accelerate its own plans in an attempt to 'get in first' and, unless corrective action is taken, there is a real danger of bottlenecks developing in critical spots.

11. Warnings have already been publicly given, notably by the Treasurer, that an increase in defence expenditure would lead to a reduction in development and social welfare activity and to additional taxes. There may well be some slowing down in the rate of output and possibly some reduction in the standard of living, but revenue remains very buoyant and the Commonwealth budget grows by over £A200 million annually. Against this growth the extra defence spending remains a comparatively small amount. The diversion of the construction industry to military work will mean fewer domestic dwellings and therefore greater problems over the assimilation of migrants. The ambitious development of the Northern Territories may also be affected. But given evidence of energy and determination by the Government, I believe that public opinion will be prepared to accept these difficulties and any taxation increases which may be necessary. At its planned peak in 1967–68, defence expenditure will represent only 4 per cent of the gross national product (assuming an annual increase of about 5 per cent in G.N.P.). This is little enough but the difficulties which will have to be overcome will arise, not from the absolute size of the additional burden, but from the fact of its being additional at a time when the economy is already fully stretched. Any falling off in the strength of the external position will similarly be exacerbated by additional defence needs.

12. Both I and my Chief Liaison Officer have from time to time reported on the deficiencies of the Australian defence policy and, in particular, on the apparent lack of a realistic sense of urgency in the Government and, indeed, in the country as a whole.³ A favourite Australian contention is that Australia's best contribution to the West is not her armed strength but the development of her natural resources and secondary industries. This is a complacent attitude agreeable both to Government and to industry. People have now come to realise that this will not do, and that Australia's foremost duty is to be able to defend herself in conjunction with her allies. I have no doubt that Australian military staffs have done their best in the past to formulate defence policy to this end positively, despite Government parsimony, but the nature of Australian organisation is such that military opinions have been relatively ineffective, so much so that previous defence reviews, announced with much flourish, appeared to have been no more than public palliatives. Certainly they did little to provoke a public interest in the Services as a career nor to lay down a considered long term policy or aim for the Australian forces.

13. This Review, too, appears to have been hurriedly compiled, no doubt for reasons in connection with the Senate elections. Its measures will hardly make an effective difference before 1968 and, indeed, the army and the navy will be materially weaker until the first lot of trained conscripts join their units and the modernised ships are available. It is difficult to find in the Review or elsewhere any clear definition of the Australian strategic aim as a whole. There is no emphasis on the need for Service co-ordination and centralised control. But having made these criticisms, I feel bound to add that, in my opinion, this Review represents a very earnest and genuine change of attitude. I think that the Government is actively alert to the need to improve the Australian defence image and is making haste to repair the neglect of the past few years. The measures, except for the failure to increase the number of naval escort vessels, are wise. It is doubtful whether Australia could absorb more at this time. We cannot foresee at this stage what further steps will become necessary in this continent if the political situation in South-East Asia continues to deteriorate, but it is on record that the Democratic Labour Party has recently come out in favour of Australian possession of a nuclear deterrent.

14. It is worth considering whether we can do anything to assist Australia in the build-up of her armed forces and whether we can derive any material benefit from the projected defence expenditure. In paragraph 7 I touched on the shortage of army officers. The Australians might welcome a tactful offer of British Army officers and non-commissioned officers to assist in military training. It is also our duty to promote, where we can, the sale of British equipment. Of late years a very considerable amount of Australian 'shopping' has been done in the American market. It was disappointing, but not surprising, that the majority of the new aircraft projected in the Review will come from America. However, no firm decision seems to have been taken yet on the 75 jet trainers nor on the sources of the re-equipment required for the army. I hope that we can put a substantial finger in these two pies.

15. I have commented above on a variety of failings and doubts connected with Australian Defence policy. If these can be attributed to any one cause I believe it would be the fact that the Australian Government has never thought the defence problem through from the beginning. They have no long term aim. Thus they cannot develop in a logical direction, neither can they plan far enough ahead either for defence as a whole or for each Service. Part of these shortcomings may perhaps be attributable to an inborn Australian frame of mind, but not a little may arise out of the distrust held by politicians, and indeed on occasions, by the general public, of the Australian Chiefs of Staff and of the armed forces as a whole. Looking ahead, the danger, as I see it, in the Government's proposals is that the Australian people may lapse again into a state of complacency and, overlooking the length of time before these measures make a real contribution to the country's military strength, allow themselves to think that no more needs to be done. Australia's forces remain light and her dependence on her allies for the defence of her vast territory, should a determined attack be made, is almost complete. The likelihood of such an attack seems remote, and Australian strategy is still the traditional one of fighting her battles abroad. The Australian programme, open to criticism though it may be, is, however, a welcome accretion of strength to a country to whom we look for partnership in maintaining peace and freedom in the world, and as such deserves all the help and encouragement Britain can give.

16. I am sending copies of this despatch to the British High Commissioners in Wellington and Kuala Lumpur.

1 This despatch was signed by G. Kimber, UK Deputy High Commissioner, Canberra, on behalf of Oliver.

2 The second HMAS Voyager (D-04) was a Daring class destroyer launched on 1 May 1952 and commissioned on 12 February 1957. Voyager collided with the aircraft carrier HMAS Melbourne twenty miles southeast of Jervis Bay on the New South Wales coast on the night of 10 February 1964. She was cut in two by the impact and sank with the loss of 81 of her crew and one civilian dockyard employee.

3 See Document 15.