Extract LONDON, 8 March 1941
2. GENERAL NAVAL STRATEGICAL POSITION [matter omitted]
(ii) Far East The Vice Chief of the Naval Staff  stated that in the plans made for war with Japan it had not been contemplated that the British Empire would be fighting Germany, Italy and Japan together. There were not sufficient capital ships to provide a fleet in Home Waters, one in the Mediterranean and one in the Far East. The prospect of success against such a combination depended primarily on the possibility of the United States coming in, in the event of war with Japan. If we were left alone against these three enemies, he could not see how the Mediterranean situation could be preserved and it would be necessary to withdraw from that region.
The Prime Minister  referred to a statement in a cable he had received from the Prime Minister, United Kingdom , that in the event of war with Japan our forces would be withdrawn from the Mediterranean should Australia and New Zealand be threatened.
The Prime Minister said it was necessary to resolve a general declaration of this nature into a plan of the specific measures that really would be possible in the event of such a contingency arising. There are large forces in the Middle East, including three Australian Divisions, and they could not just be left to their fate. To withdraw them, however, would take time, shipping would have to be provided, convoys organised and Naval protection afforded in the meantime. Much could happen in the Far East during this period.
The Vice Chief of the Naval Staff stated that we should not go to war with Japan over their occupation of any part of the Netherlands East Indies-this would only add to the number of our enemies, and if Germany could first be defeated we could turn to Japan later and deal with her. He would bluff up to the point of telling Japan that if she went into the Netherlands East Indies we would fight, and the strong stand of a few weeks ago had undoubtedly deterred Japan from taking action. If the United States should join us there would be no problem in this region, and the result of the Staff talks now being held should shortly be known.
The Prime Minister stated that, if Japan should establish herself in the Netherlands East Indies, Australian public opinion would undoubtedly insist on military action to eject her, as her presence in this region would strike at the very basis of Australian defence by introducing a very powerful threat to Singapore, and by enabling Japan to make an attack on Northern Australia with land-based aircraft.
The Vice Chief of the Naval Staff was of the view that if we had adequate air strength in the Far East Japan would not attempt such an operation. It might not be possible immediately to despatch capital ships to Singapore.
The Prime Minister pointed out that this view supported his contention for the provision of adequate air strength at Singapore, including Hurricane Squadrons. He was of the view that in the general reference to reinforcing our position in the Far East with capital ships we have only been deluding ourselves.
The Vice Chief of the Naval Staff repeated that the Naval Plans had not provided for a War against triple enemies, but this point was queried by the High Commissioner  who observed that the only variation in the original plan had been the defection of France as an ally.
The Prime Minister considered that there was need for a definite plan of Naval reinforcement east of Suez to the extent to which it might be possible on a progressive basis according to events in the Mediterranean.
It was necessary to get down to a realistic appreciation of our position on Naval dispositions and consider in conjunction with them the extent to which an increase in air strength in the Far East could supplement the provision of capital ships which might be available, [? or] to provide for the security of this region in their absence.
Australian local defence on land and in the air had been based on an hypothesis furnished by the Chiefs of Staff which indicated the improbability of invasion because of the Naval protection which could be afforded in the Far East. Recent approval had been given for the increase of the strength of the R.A.A.F. for Home Defence from 19 to 32 Squadrons and, if the aircraft for these were provided and the air strength at Singapore increased, a powerful deterrent would be offered to Japanese aggression, particularly if the Japanese Air Force should prove to be no better than the Italian Air Force. There is therefore every reason for completing the equipment of the R.A.A.F. and developing the Australian aircraft industry as the source of supply East of Suez.
In reply to an enquiry the Vice Chief of the Naval Staff stated that the United States Navy was considered to be better than the Japanese Navy, and he would have no hesitation in engaging the Japanese Fleet with 60% of their number of British ships.