1. Your telegram 85.  We agree fully with the view that it is important that Australia should continue to play a notable and worthy part until final victory is achieved and that Australia's war record entitles her to carry out an adjustment in her manpower position which is equitable in comparison with similar action being taken by other Allied countries.
2. We fully appreciate the manpower difficulties confronting the Government, particularly in regard to housing and primary production. We fear, however, that publication at this juncture that a further fifty thousand men will be released from the fighting services by the end of this year might have an adverse effect on various Conference proposals and also on the part we shall be able to play in the final Pacific settlement. We have stressed here repeatedly that the major effort Australia has made and intends to continue until Japan is defeated entitles us to special consideration of our views and this is generally accepted.
3. We are not clear as to  on the Army and Air Force of the decision to release a further fifty thousand and would like some information on the following points:-
(a) Having regard to the anticipated repatriation within six months of 17,000 R.A.A.F. and 6,500 prisoners of war, that proportionate corresponding reductions are to be made in the Army and Air Force and that reduction will also be effected in base and L. of C.  units, what is the contemplated operational strength of the Army at the end of 1945, and at what date will the Army be reduced to three divisions? (b) What are the present and proposed intakes of males into the Army and Air Force? (c) Will the proposed intakes be sufficient to replace wastage in the three services and to maintain for the duration of the war the tentative objectives of strength referred to in paragraph 13? (d) The tentative objective of strength for the Army involves reduction of the present operational forces from six to three divisions and it is stated that corresponding proportionate reductions will be made in the Air Force. Does this mean that the Air Force organisation will be reduced from 53 to approximately 26 squadrons? 4. In paragraph 7 it is stated that the Government views with some anxiety the possibility that the use of two divisions in Borneo may result in a prolonged commitment. We feel that, in any case, it would be difficult to avoid such a commitment wherever the two assault divisions are employed. This will certainly be so if they are associated with American forces in forward movement against Japan under General MacArthur (see paragraph 18 of your cablegram).
5. Re paragraph 14. Information will be sought from the Combined Chiefs of Staff as to whether more definite advice can be given as to the period to be adopted as basis for planning for the war against Japan. 6. We agree with the views expressed in paragraphs 16 and 17 regarding operational control of Australian forces and the necessity for allocation of sufficient shipping, equipment, etc., to sustain operations under Australian control.
7. Re paragraph 19. What is the size of the token force proposed to be assigned to South East Asia Command? Would this force be part of the objective strengths mentioned in paragraph 13? 8. Are we right in assuming that General Blamey and the Chiefs of Staff concur in these Proposals? 9. Will await your reply and any further information before any action is taken with the United States authorities.