Your SFC38. [1] The following comments are made on your reply:-

Paragraph 1: Noted.

Paragraph 2: Following the review of the manpower position in
February, the Prime Minister announced that a further reduction in
the strength of the Forces was not possible, but promised to
review the position again in June. In view of the end of the war
in Europe and announcements by other countries of the reduction of
their Forces, the demand for a statement by the Government of its
intentions would not permit of any further delay.

The day prior to my announcement of the reduction, the Government
faced a motion of censure which referred to the housing and food
production situations which are largely questions of manpower. The
review had been made and the decisions reached at a most opportune
time. They have been received with general satisfaction, the few
criticisms being directed to the fact that the reduction does not
go far enough or that the decisions are rather belated.

As will be noted from the factors mentioned in the reply to
paragraph 3 (a), it will take some time to give effect to the
reductions announced and contemplated. It is therefore a matter of
supreme importance to the Government that the authorities in
Washington and London should be acquainted with the Government's
decisions and their agreement obtained as requested in the
previous cablegram.

It was the view of both War Cabinet and the Advisory War Council
that a war effort of the dimensions outlined in paragraph 13 of
cablegram No. 85 [2] was a contribution which, with our past
record, should guarantee the attainment of our objectives in the
peace settlement.

Paragraph 3 (a): The Defence Committee, in association with the
Commander-in-Chief, have been requested to submit their
recommendations on the future organisation and strength of the
Forces that should be maintained after the end of the next phase
of operations and after providing for the present special releases
and future additional reductions entailed in reaching the
objectives of strength referred to in paragraph 13 of cablegram
No. 85.

The plans for the reduction of the Forces and the absorption of
discharged members in the civil economy are to be based on the
realisation of the reduced strengths as soon as:-

The operational plans will permit.

The re-organisation of the Forces can be carried out.

The orderly re-settlement of discharged members can be planned and
arranged.

Paragraph 3 (b): The Defence Committee has been requested to
submit its recommendations on the monthly intake for the services
necessary for the maintenance of the reduced establishments. The
Defence Committee is also to report on:-

(1) The merits of continuing recruitment in view of the time that
will elapse before recruits can become trained soldiers. This also
has a bearing on the maintenance of training establishments.

(2) The likelihood that numbers of members of the Forces might
prefer to continue to serve in any garrisons and forces of
occupation which may be maintained.

(3) The case for the continued recruitment of women for the
services, if this is still desired.

Paragraph 3 (c): See answer to 3 (b).

Paragraph 3 (d): In furnishing the report referred to under 3 (a)
the
Defence Committee is to have regard to the following observations
by War Cabinet:-

'The present approved operational strength of the Army is 6
divisions and 2 armoured brigades, and the authorised objective of
the R.A.A.F. is 53 squadrons. In addition, there are approximately
19,999 R.A.A.F. personnel serving abroad (including 3,655 missing
and prisoners of war).

In the future organisation and strength of the Forces, a
relativity is to be maintained between them from the aspects of a
balanced war effort and a balanced post-war Defence Policy.

The R.A.A.F. personnel serving overseas are additional to the
strength in the Southwest Pacific Area and, on repatriation, this
number should, in principle, be discharged. The Defence Committee
is to report on the effect of the repatriation of the members of
the R.A.A.F. from overseas in relation to the R.A.A.F. strength
and intake in the Southwest Pacific Area.

In considering the organisation and strength of the Air Force, the
Defence Committee is to have regard to the reply to be furnished
by the Department of Air to the Acting Minister for Defence on the
following questions raised in his letter [3] of 30th April, 1945:-

The strength which should be provided for participation in the
forces of occupation in Europe.

The strength which should be provided for participation in the
very long range Task Force in the Pacific.

In view of the stage of the war and the manpower position, should
the strengths of these forces be additional to or included in the
future authorised strength of the R.A.A.F.'
Paragraph 4: The tentative composition of the operational forces,
totalling three divisions, referred to in paragraph 13 of
cablegram No. 85 would be as follows:-

(I) Two infantry brigade groups for New Guinea and the Solomons
referred to in paragraph 8.

(II) A division of three infantry brigades, including one in
reserve for the containment of the enemy force in the Gazelle
Peninsula in New Britain.

(III) This leaves one division and one infantry brigade. The
division would be the Expeditionary Force component referred to in
paragraph 17, which would be assigned to General MacArthur, in
accordance with paragraph 18, for the forward offensive against
Japan. The size of the token force assigned to the South East Asia
Area for association with the forces allotted for the recapture of
Singapore remains to be determined, but it would probably not
exceed a brigade.

It will be noted from (III) that one division only is assigned to
General MacArthur for the forward offensive against Japan. The
point in paragraph 7 of cablegram No. 85 is that the reductions
will be prejudiced if there is a prolonged commitment for the two
divisions in Borneo.

Paragraph 5: Noted.

Paragraph 6: Noted.

Paragraph 7: See answer to paragraph 4.

Paragraph 8:

(I) General Blamey attended a meeting of War Cabinet and the
cablegram was agreed to by him before despatch.

(II) The views of the Government in paragraph 7 of cablegram No.

85 are based on General Blamey's advice.

(III) The objectives outlined in paragraph 8 are contained in an
appreciation submitted by General Blamey [4] and have been
approved by the Government and the Advisory War Council. The views
on the reduction of Rabaul are those of General Blamey. General
MacArthur has expressed the view that when the time comes to
liquidate the Japanese in this area, it would be proper for Allied
Forces to be used.

(IV) The decision in paragraph 13 to release at least 50,000 men
is a Government one based on its assessment of the needs of the
over-all manpower situation.

(V) The tentative objectives of strength referred to in paragraph
13 have been adopted as approved aims of Government Policy. The
future Army strength is based on a proposal submitted by General
Blamey [5] for the Government's consideration that, on the basis
of the strength of forces likely to be deployed by the United
Nations against Japan, the Australian contribution to the Allied
effort should be reduced to a total of approximately three
divisions. The pegging of the Navy at its present strength is a
Government decision in view of the fact that the reduction of
50,000 is confined to the Army and Air Force. The direction on
future Air Force strength is also a Government decision. See also
Government observations under paragraph 5(d) above.

(VI) The views in paragraph 16 on the future command set-up in the
Southwest Pacific Area in regard to the operational control of the
Australian Forces on the mainland of the Commonwealth and in Papua
and Australian Mandated Areas are those of the Government, which
are concurred in by General Blamey.

(VII) The assignment and command of Forces as mentioned in
paragraph 17 is in agreement with past practice and accords with
the views of Service Advisers.

(VIII) The reasons given in paragraph 18 in support of continuing
to be associated with the forward movement against Japan under
General MacArthur are those of the Government and are reinforced
in one instance by the advice of General Blamey as to what is the
popular desire of the land forces.

(IX) The token force for South East Asia Area was proposed by
General Blamey, if the Government should desire to assign its main
force to General MacArthur as in (VIII). The Government was of the
opinion that this would be strongly favoured by public opinion.

The Commander-in-Chief of the British Pacific Fleet has raised the
question of the assignment of the R.A.N. Squadron if any change is
made and the chief of the Naval Staff favours it. The R.A.A.F.

Squadrons for the R.A.F. Task Force was discussed by the Minister
for Air when in London, and the proposal is supported by the Chief
of the Air Staff.