CANBERRA, 30 September 1944
(1) REVIEW OF THE WAR SITUATION BY GENERAL MACARTHUR
General MacArthur reviewed the war situation in the Pacific, with special reference to the Southwest Pacific Area.
2. The review embraced the following aspects raised by the Prime Minister, namely:-
Global Strategy-Decisions of the Quebec Conference.  Base Requirements in Australia for British Naval Forces.
Operations for Neutralisation and Ultimate Liquidation of Japanese Forces in Australian and British Mandated Territory.
The main points of his review are indicated hereunder.
3. General MacArthur said that recent operations had been exceedingly successful, in fact, far more successful than could ever have been anticipated. He referred to the policy that he had pursued of isolating the Japanese Forces, and rendering them innocuous. To have adopted the policy of reducing the enemy occupied islands one by one would have cost many thousands of lives which he could not possibly afford, and which, in any case, would have represented so much waste. He intimated that such policy would be continued until the stage when it was necessary to endure sacrifices in the capture of the Philippines.
4. In regard to future operations, in so far as they affected the Australian Forces, they would be, firstly, the garrisoning role for neutralisation of Japanese pockets on the various islands and, secondly, the operational activities of the two A.I.F. Divisions which were to accompany the United States Forces in the advance against the Japanese. Details of the postings of the First Australian Army for garrison duties were given. He stressed the policy that British possessions and Australian mandates should be garrisoned by British and Australian troops, and that, in the capture of British Borneo, British and Australian troops should be used. He considered it essential to British prestige that this course should be followed. The Admiralty Islands would continue to be garrisoned by the United States Forces, as they were one of the main forward bases.
5. When asked whether the policy of neutralising Japanese pockets contemplated an effort to liquidate them, General MacArthur said that such was not his idea, and that his directive to the Commander-in-Chief, Australian Military Forces, would be confined to neutralisation. He appreciated that Australian Local Commanders would possibly find the garrison duties irksome and might desire to undertake some active operations, but this would be a matter for direction by the Australian Authorities. Japanese pockets were of no value whatever to Japan in the war and were depreciating at the rate of ten per cent per month. They did not present any problem. It would be sufficient for the present to garrison the islands and leave the Japanese gradually to waste away.
6. General MacArthur said that he considered that the clearing of the islands of enemy forces should be related to the strategic value of the clearance. When the time came to effect this, it would be proper for Allied Forces to be used as Allied Forces were used in the general attack upon the enemy.
7. The arrangements for the attack against the Philippines were traversed, and the operational dates given. The Australian divisions would take part in the capture of Mindanao. They would later be employed in the capture of British Borneo, and later again in the attack on Java.
8. General MacArthur said he had been informed of the decisions of the Quebec Conference. The proposal that a British Task Force should operate in the Pacific had been strongly opposed in certain quarters, but this had been overruled. His view had been that every offer that would assist in the final defeat of Japan should be accepted. He now understood that this Fleet would operate directly under the command of Admiral Nimitz. He had personally pressed very hard in the past for the British Eastern Fleet to be placed at his disposal, but without success. The Eastern Fleet had done very little. It had taken part in two nuisance raids, but had been far less active operationally than the Australian squadron.
He hoped that British Naval Forces would be available to be employed in support of Australian Troops in their operations against the Philippines and British Borneo. It has been his objective for some time gradually to withdraw the American Forces North from Australia. Within a very short period, very few would remain. 9. He had fully realised the strain that had been placed on Australia, clue to the demands being made on its production, and it was his view that it should be relieved of this strain and, apart from its own military effort, returned to normal conditions as early as possible.
10. Regarding the basing of the British Fleet on Eastern Australia, General MacArthur commented that Australia had been unable to keep in repair the ships of its own squadron. He mentioned that increased capacity was now available with the newly completed Cairncross Dock, Brisbane, and this would be added to when the Sydney Graving Dock was completed. The residue of capacity, after meeting the requirements of the Australian squadron, would be, however, an infinitesimal contribution to the needs for repair and maintenance of the Fleet which it was proposed would be based on Eastern Australia. He referred also to the fact that if such a Fleet were based on Australia, it would be operating some 4,000-5,000 miles from its base, and drew analogies which pointed to the doubts which he felt as to the efficacy of the proposal. It could not use the Torres Strait, as no Naval Commander would take the risk of taking a 10,000 ton cruiser through the Strait, quite apart from a battleship. It was to be expected that the Fleet would arrive too late to take part in pending operations. He anticipated that, before the Fleet arrived, the aspects to which he had drawn attention would be recognised by the United Kingdom authorities.
11. General MacArthur said that prior to the attack on Morotai, there was evidence that, for some reason, the Japanese Air Force was not capable of putting up any material opposition. On the capture of the air field, some hundreds of Japanese planes were found grounded. He then formed the view that some very important factors had occurred which had led to the failure of the Japanese to offer resistance from the air. These might be, loss of experienced pilots, inadequate training of replacements, inability to form balanced squadrons, insufficiency of maintenance and inadequate ground organisation, or shortage of aviation spirit. It was not possible to decide which factors were the primary cause, but one or more of them had led to the Japanese failure. He further considered that this was not confined to the Japanese Air Force on Morotai, but probably extended to other places.
12. Recent carrier-borne air attacks on the Philippines had supported his view. An outstanding fact was that the United States Naval Force, which formed an excellent target, had stood off the Philippines at a distance of only about 70 miles for approximately 2 days, without being attacked. This, with the recent successes, is one of the considerations which has led to the decision to advance the dates of the attack on the Philippines.
13. In regard to China, General MacArthur said that the American air fields, from which it was expected Japan would have been bombed, had been lost. The collapse of China would prove a serious blow to the Allied cause and would greatly detract from the prestige gained by the great successes in Europe. He felt, however, that China would not collapse, as it was a nation of compartments, the loss of which individually would not affect the whole.
14. In respect to Russia, it could be taken as almost certain that when Germany was defeated, Russia would declare war against Japan.
It was a question for very serious consideration as to whether Russia should not be permitted to bear the initial brunt of the defeat of Japan, rather than British and American Forces. Britain and America did not stand to gain one inch of ground by the defeat of Japan, whereas it was to be expected that Russia would form an independent State of Manchuria and possibly of Mongolia, and integrate those States as part of the U.S.S.R.
(2) AUSTRALIAN WAR EFFORT-STRENGTH OF THE SERVICES
The question of the manning of ships of the Royal Navy by Royal Australian Navy personnel was discussed. It was explained to General MacArthur that the Chief of the Naval Staff had advised that the British Admiralty was unable to man all the ships at its disposal and that, in consequence, a proposal was under consideration for the R.A.N. to obtain, on loan, and man, the following craft:-
One light fleet carrier available in December, 1944; and Two cruisers available in September and October, 1945, respectively.
It was explained that this would involve approximately 3,000 additional men spread over a period of 10 months, and General MacArthur's reactions were sought as to:-
(a) The value of this addition to the present Australian naval strength for operations in the Southwest Pacific Area.
(b) Its value to Australia from the point of view of prestige.
(c) Post war value if the vessels were retained by Australia.
2. General MacArthur was informed that the personnel could only be provided by reducing the present monthly allotments to Army and Air, and that both Navy and Army considered that the allotment to Air should be reduced in their favour.
3. General MacArthur said that Mr. Churchill's cable announcing the decision to provide a strong British Naval Force for the operations against Japan answered the question. He said that the proposal for the R.A.N. to man United Kingdom ships was too late to be of value in the present war. The Royal Navy ships, if remaining in Australia after the war, would be out of date.
4. General MacArthur went on to refer to the tremendous advance in aircraft and the destructive force of explosives. He was convinced that science would so develop aircraft and explosives that posterity would view our present equipments as completely antiquated. He said that every nation had its particular Defence problems. Australia, like the Philippines, could not hope to provide and maintain sufficient naval forces for their security.
They must look to the greater nations to provide the naval strength to guard them. An examination of conditions peculiar to Australia led to one conclusion-that Air was the first necessity for Australian defence. He concluded by saying, 'Australia must watch the air'.
5. The Prime Minister said he would not agree to the proposals for the manning of the Royal Navy ships by the Royal Australian Navy.
(3) FUTURE EMPLOYMENT OF THE R.A.A.F. IN THE SOUTH-WEST PACIFIC AREA
GENERAL PRINCIPLES The Prime Minister referred to an interview on the 14th September with the Air Officer Commanding, R.A.A.F. Command. The major aspects considered related to the allocation of R.A.A.F. resources as between participation with American Air Forces in forward offensive operations in the Southwest Pacific Area, and commitments involving mopping-up operations and air garrison duties in re-occupied territories.
2. General MacArthur read the statement of principles embodied in War Cabinet Minute No. (3804)  and expressed his complete approval of them.
USE OF SPITFIRE SQUADRONS 3. Regarding the Spitfires, he said that they had a very short range and could not use bombs. They were valuable as interceptor aircraft, but, being a fragile type with short range and inability to carry bombs, were not to be compared with the P.40. He had arranged for the squadrons to be moved North to the New Britain area where they would operate with P.40's in providing air cover for Australian garrison forces.
(4) BASING OF NETHERLANDS FORCES ON AUSTRALIA
General MacArthur said that he agreed with the decision  that had been taken by War Cabinet to approve in principle the request  of the Netherlands authorities for the provision of facilities for the force of 30,000 men proposed to be based on Australia, and with the view that it must operate under his Command as Commander- in-Chief, Southwest Pacific Area.
2. He considered, however, that the force should be trained and fully equipped before embarkation from Holland, and that it should arrive as a complete fighting force available to be handed over to the Commander-in-Chief for operations in Dutch territory.
(5) APPOINTMENT OF CHIEF OF THE AIR STAFF
The Prime Minister referred to his previous discussions in Brisbane with General MacArthur in regard to this subject, and informed him of the aspects that had been raised in Mr. Bruce's cablegram 116 of 28th September  as to the responsibilities in relation to operations of the proposed appointee-Air Marshal Park.
2. General MacArthur referred to difficulties that had existed in the past in relation to the Chief of the Air Staff and the Air Officer Commanding, R.A.A.F. Command, and the concern that the Minister for Air had felt in this regard. Nothing serious had, however, resulted, and he felt that any differences that had existed in the past were now quiet. The strategical scope of the war has gone so far forward that an entirely different situation has developed. He considered it no longer necessary to bring a senior R.A.F. officer to Australia. General MacArthur felt that, questions having been raised, an opportunity presented itself for review, and he felt that in replying, advice should be furnished that the tempo of the campaign had gone so fast and conditions had changed to such an extent that it was no longer necessary to proceed with the proposal.
3. General MacArthur added that had this change taken place when it was first mooted , advantages would have accrued, but he now considered it too late to make such a change.