JAPAN AND THE INTERNATIONAL SITUATION
(The three Chiefs of Staff  and the Minister for Air  were present during the latter part of the discussion on this subject).
At the request of the non-Government members, a discussion took place in regard to the position of Japan in her relation to the Axis and Allied powers.
The Minister for the Army  stated that from advices now being received the situation was veering towards Japanese intervention in the war against us, and that European politics were the main determining factor in this. It was felt that Germany must act very soon, her main purpose being to secure Japanese intervention, thus diverting the efforts of the British Empire and interfering with supplies to Great Britain from the United States.
Japan now appeared to be uncertain as to the action she should take. Hesitation was caused by the determination of the British Forces and the stand they had made against Italy, and her fear of an encirclement policy by an alliance between the United States and the British Empire. Nevertheless, there was every possibility of Japan making a move against us in the next three months, due to a great extent to the influence being exerted by an irrational section who were working up the masses against the British Empire by claiming that British actions were the cause of the deterioration in the economic life of the community, which in fact had been largely brought about by the disastrous effect of the war in China. A major problem therefore confronted us, which was made more difficult by the doubt as to whether the United States would intervene unless her own territories were involved.
The immediate effect of war with Japan would be felt in Australia in her interstate trade, which was largely dependent on sea-borne traffic. The Minister for the Army stated that, in the view of the military advisers, it was doubtful whether an invasion of Australia would take place, but no doubt existed that serious dislocation and harm would be done by continuous and effective raids.
Mr. Curtin  stated that Japan's policy was one of opportunism.
If she thought the situation favoured it, she would make war against us tomorrow, when she would use her navy to demobilise Australia, with disastrous effect on our commercial and economic life. He also could not overlook the possibility of temporary occupation by the Japanese of some portion of Australia.
Psychologically the effect of such an occupation would be very great, as the Axis powers would advertise to the world that Great Britain was losing territory. Australia was dependent for her overseas trade and for the reinforcement of her troops abroad on the vital route through the Indian Ocean. Therefore it was logical to say that to meet the Japanese menace additional Naval Forces were required on the Australia Station. He had been impressed by the fact that Japanese vessels were cruising the seas without their presence being known to the authorities in Australia. This was evidenced by the unexpected arrival recently of a Japanese whaler at Fremantle.
The important aspect of the situation in the Mediterranean appeared to be not so much our military successes in Libya, but the German attempt to bomb the British Navy out of those seas, while in the Atlantic the submarine and long-range bomber menace was doing tremendous damage to the vital trade routes of Great Britain. Notwithstanding the desirability of reinforcement of the Australian Naval Squadron, these factors indicated that at present it was not practicable.
The next six months would, in his opinion, be fatal to one side or the other. It was therefore essential that we should dissipate internal friction and that all sections of the community should put their best efforts forward to maintain both Australian and Empire integrity. He recommended that the above facts should be given to the Premiers of all States, that Parliament in a secret session similarly should be given all information possible, and that in the meantime we should enlarge our Defence Programme to ensure that all steps possible are being taken for effective defence. While major questions of this nature were demanding attention, he thought that matters such as petrol rationing, ban on overtime and other relatively unimportant matters which had been receiving consideration by the Advisory War Council should be placed in the background.
To meet the international situation, Mr. Curtin suggested that the Army effort should be made as large as could be managed and that:-
(a) The Naval training facilities at Fremantle appeared to be insufficient and should be investigated.
(b) While he realised that it was impossible at present to obtain more ships, the Naval strength should be doubled to train personnel.
(c) The resistance to attack of the R.A.A.F. should be strengthened.
The danger to Australia would come in the first place from the sea, secondly from the air, while the Army would only be brought into full action after both the Navy and Air Force had failed.
It was decided at this stage of the proceedings to have the Chiefs of Staff attend the meeting.
Mr. Curtin reiterated his earlier views regarding the reinforcement of the Australian Naval Squadron to the Chief of the Naval Staff, who replied that the loss of the French Fleet vitally affected the position. Previously it had been relied upon, but now the British Navy had not only to defend the Mediterranean area, but in addition the whole of the French coast was available to the enemy, giving him easy access to trade routes and enabling him also to make air attacks on those routes from the French seaports.
The British Navy was at present extended to the utmost. All these factors affected our pre-war planning for the relief of Singapore.
In the event of hostilities, the Japanese policy would be to maintain a cruiser and submarine force and possibly an aircraft carrier in the Pacific Islands. Our forces could not be regarded as sufficient to meet this menace but should, on the other hand, be able to maintain our trade if the Australian Squadron were located in Australian waters.
Mr. Curtin asked whether a cruiser attack could not do considerable harm to Western Australian shipping. The Chief of the Naval Staff advised that it could not do a great deal of damage in view of the 9.2-inch battery at Rottnest.
The Chief of the Naval Staff stated that he was of opinion that minelaying in Australian waters was carried out by a lone raider, either in bad weather or under cover of darkness. He discounted the probability of the presence of enemy submarines in Australian waters, and stated that all reports had been investigated but the facts were against their presence.
In reply to a question by Mr. Curtin as to whether he considered that any greater activity could be taken in hand by the Department of the Navy for the effective defence of Australia, the Chief of the Naval Staff stated that the maximum effort was now being made and that this effort was not being hampered in any way by the withholding of any authority by the Government, but that on the other hand the Naval effort was being set back by continuous strikes and labour problems in shipyards and docks, which of late had shown a 25% lag in output over earlier months.
In reply to questions from non-Government members, the Chief of the Naval Staff stated that he was satisfied with the organisation of shipyards and internal administration of the industrial establishments, but despite repeated appeals to the men working on jobs delays continuously arose through industrial strife. It was agreed that every effort should be made to overcome industrial delays in the construction programme. Non-Government members expressed the view that this might largely be overcome with better publicity in Australia as to the real war position.
The Chief of the Air Staff indicated that the slowing down of manufacture due to labour difficulties was also causing problems in the Air Force. In reply to Mr. Makin , the Chief of the Air Staff stated that the local defence requirements were not being sacrificed by the operation of the Empire Air Training Scheme, and that it was desirable for the scheme to be given full effect and for pilots to be made available for the R.A.F. overseas, in accordance with the original intentions of the scheme. The required output of pilots for the local defence scheme of 32 squadrons and the reserve crews for local defence was being maintained from schools.
Mr. Curtin asked whether there would be any change in these Air activities if we were required to meet Japanese intervention. The Chief of the Air Staff stated that our Home Defence scheme had been planned to meet this contingency. Mr. Curtin expressed some doubt as to whether Japan would follow normal strategical methods, but would be more likely to collaborate with Germany and, if possible, occupy some portion of Australia, which would be a blow at British prestige. It was possible that she would make a bold move contrary to strategy, and he quoted Norway as an example of such Axis activities. The Chief of the Air Staff stated that Norway was in a very different category from Australia, as she was practically adjacent to Germany and there were no long lines of communication to maintain such as would be involved in an invasion of Australia. In addition, Japan must take into consideration the British stronghold at Singapore and the possible assistance that would be rendered by the Netherlands East Indies.
Non-Government members agreed that as a result of the frank discussion that had taken place they had come to a fuller appreciation of the alarming situation that Australia was in, and recommended that a press statement should be issued so that the position might be brought nearer home to the general public. It was agreed that the Council should meet again later in the evening to consider a draft press statement to be prepared on these lines.