I am sorry to have been so long in answering your letter of 16th September about Co-operation in Commonwealth Defence. We have been thinking very carefully over the points you raised.
2. I am glad that you agree that there should be a United Kingdom Liaison Staff in Australia, consisting of a Chief Liaison Officer with a junior colleague from each of the other two Services. Thank you also for your assurance that you will give them all facilities. Our intention is that the Liaison Staff shall be made up as follows:
Naval Representatives- Rear-Admiral (Chief Liaison Officer);
Army Representatives- Colonel;
R.A.F. Representatives- Air Commodore;
1 more Junior Officer;
Secretariat- 1 Staff Officer;
and that its composition should be reviewed after 12 months. The post of Chief Liaison Officer will be filled by the Senior Representatives of the three Services in rotation, starting with the senior Naval Liaison Officer. The number of United Kingdom Service Representatives in Australia has already been reduced by 58, and I think that as soon as the J.C.O.S.A. has been disbanded and our new Liaison Staff appointed, all the points which you made in your letter of the 22nd July  will have been met. I am as anxious as you that there should be no extravagance in our Service representation in Australia, and I hope therefore that J.C.O.S.A.
may be disbanded very soon.
After J.C.O.S.A. has been abolished, there may still be a few administrative duties to be done by United Kingdom Service Officers in Australia. These duties (which will be entirely domestic and will not detract from the complete responsibility of the Australian Government for B.C.O.F.) may last until the United Kingdom contingent is finally withdrawn from B.C.O.F. We may therefore need, in addition to the staff mentioned in paragraph 2, an Army Major and Staff Captain and possibly one junior Staff Officer from the Royal Navy and two from the Royal Air Force to perform these administrative duties. Our Service Representatives in Australia have been told, however, that the Liaison Staff must be kept as small as possible, and they have -also been told to agree upon plans for the transfer to the Australian Government of all responsibility for B.C.O.F., so that when J.C.O.S.A. is formally abolished, the hand-over can be made smoothly and rapidly.
4. I quite agree with what you say in paragraph 12, that it is important that there should be a clear definition of the individual responsibilities of the three Senior Service Liaison Officers in their capacity as United Kingdom Service representatives to the Australian Service Departments, as well as of their responsibilities as accredited representatives to the Australian Defence Department. I think you will agree that this distinction and the relation between them and the Chief Liaison Officer are made clear in the attached directives  which we propose to issue to them, and upon which I should be glad to receive your comments.
5. I welcome the proposal made in your letter of the 28th May and mentioned again in paragraph 12 of your letter of the 16th September, that our High Commissioner and the Chief Liaison Officer should attend meetings of your Council of Defence when matters affecting the United Kingdom are under consideration. I agree that your High Commissioner should similarly be invited to meetings of our Defence Committee when matters of concern to Australia are under consideration, and that your Defence Representative should accompany him on these occasions as an adviser.  Your representatives will probably have to attend meetings of our Defence Committee less frequently than our representatives will have to attend your Council of Defence, since under the new arrangements Australia will take the initiative in considering the defence of the Pacific, and such matters will comparatively seldom come on the agenda of our Defence Committee which, as you know, is an executive organ of the United Kingdom Cabinet concerned with a great mass of domestic business. I am also willing that the Australian Defence Representative in London should attend meetings of the United Kingdom Chiefs of Staff Committee when matters of concern to Australia are under discussion.
6. Thank you for giving me an opportunity of seeing the exchange of letters between yourself and the Prime Minister of New Zealand about the machinery for co-operation between Australia and New Zealand. I am very glad to learn that you have reached a satisfactory agreement.
7. Perhaps I might take this opportunity of mentioning again the question of the defence of vital sea communications, to which you refer in paragraph 14(c) of your letter of 16th September. As you say, the machinery now agreed upon provides a means of examining this, and I hope that we can soon have an examination made. The question will be affected by our decision to accelerate the run down of the United Kingdom Services (about which I have telegraphed to you separately), and it is therefore important that we should consider the matter very soon.
8. As you point out in paragraph 15 of your letter, the Defence Co-ordination Committee, Far East, is part of the United Kingdom Defence machinery and responsible to it. Nevertheless, it is important that Australia and New Zealand should have liaison on an official level with that body. I have seen your letter to the United Kingdom High Commissioner of the 6th January, from which I take it that you agree in principle that liaison could be achieved by the attendance of the Australian Commissioner in Malaya as an observer at certain meetings of the Committee. I understand that this has been the practice in the past and I hope that it can be continued.
9. I entirely agree with all that you say about the retention by each Government of the Commonwealth of the right to decide its own Defence commitments, and I am glad that this correspondence has afforded an opportunity to reaffirm this, and to resolve any confusion there may have been as to the way in which we should cooperate in the future. Please write to me again if you feel that there is any way in which our co-operation in matters of Defence can be improved.