124 War Cabinet Minute 4293
CANBERRA, 28 June 1945
AGENDUM NO. 245/1945-BASING OF NETHERLANDS FORCES ON AUSTRALIA
The following decision  was taken on the recommendation of the Advisory War Council:-
(1) In Minute No. 3807 of 21st September, 1944 , War Cabinet approved that the attitude of the Commonwealth Government to the approach by the Netherlands Government for the basing of a Netherlands Force on Australia be defined as follows:-
(a) The proposal of the Netherlands Government for the basing of a Netherlands Force of approximately 30,000 troops on Australia commends itself to the Commonwealth Government, in principle, and the Government is willing to provide facilities and assistance as may be practicable in the light of its existing and potential commitments.
(b) As a first step, it will be necessary to ascertain what is involved in accommodating, training and maintaining the proposed Netherlands Force, as well as financial and other detailed arrangements, in order that the proposal may be related to the Government's existing and potential commitments.
(2) The report of the Defence Committee (Minute No. 106/1945 of 27th March) indicates that the provision of the requirements of this Force will absorb manpower to the extent of several thousands. It was noted that the Defence Committee decided not to make any recommendation upon the question whether N.E.I. Forces should be based on and trained in Australia.
(3) In the meantime, the Government, on 31st May, decided to reduce the strength of the Australian Army and Air Force by 54,000, which figure was increased to 64,000 on 28th June, the primary objective of this reduction being to restore a proper balance between the direct military effort and its industrial basis appropriate to the present and immediately prospective stage of the war. The Government's policy on Allied commitments was recorded in Minute No. (4223) of 31st May 1945, and stated to Parliament by the Acting Prime Minister on 1st June as follows:-
'It has been made clear from the start, that there are considerable limitations on Australia's capacity to accept additional commitments for the maintenance of Forces from Australian sources of manpower and materials. It is of vital importance to other Governments that we should not make promises which we cannot fulfil. It is of equal importance to the Commonwealth that it should not undertake commitments which are beyond the capacity of its resources to provide. It is the duty of the Production Executive to consider Allied proposals in relation to other aspects of the war effort, in order to assess the capacity to provide for them. To guard against the neutralisation of the measures being taken to establish equilibrium in the war effort, the Production Executive has been requested to fix ceilings for the Allied commitments that can be undertaken.' (4) In a separate Minute (No. (4292))  'Review of the Works Programmes for the Royal Navy' it has been decided, in view of the imperative needs of the housing situation, its manpower and material requirements, and the measures being taken to restore a proper balance between the direct military effort and its industrial basis appropriate to the present and immediately prospective stage of the war, that no additional works commitments are to be accepted for the Royal Navy unless:-
(a) They can be met by the diversion of manpower at present employed by the Allied Works Council which cannot be diverted to housing.
(b) Revisions can be made in the present Royal Navy works programme which can be carried out by the present labour bloc employed on the Royal Navy works, after providing for the reduction in strength which has been in suspense, and the further reduction which is to be effected by the end of 1945.
It was noted that commitments totalling over 25-millions have already been accepted for the Royal Navy.
(5) It is now evident that the existing and potential commitments referred to in Minute No. (3807) of 21st September, 1944, preclude the acceptance of commitments involving demands on Australian manpower as outlined in the Defence Committee's report for a Force of 30,000 men. In regard to the Force of 5,600, the Government is unable to accept any commitment at present and desires to be informed of the precise manpower commitment involved for the various classes of requirements.  The needs proposed to be met from Service stocks are to be shown clearly, together with an indication as to whether they will be provided from surplus stocks or will entail additional production for replacements.