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DEFENCE EXPENDITURE STUDIES
The Committee considered a note by the Chairman of the Defence Review Working Party (OPDO(67) 4), to which was attached a draft memorandum to
cover the submission to the Defence and Oversea Policy Committee of the
Working Party's Report on the Defence Expenditure Studies, prepared in accordance with the instructions of the Committee at its previous meeting (OPDO(67) 2nd Meeting, Confidential Annex).
In discussion it was agreed that Ministers should be advised that the re
were broadly two, not three, courses of action open. No Department was suggesting that to withdraw totally from the Far East without establishing
a minimum defence presence in Australia was a real possibility. The two
alternative courses were either to plan on a reduction of about half in our
forces in Singapore and Malaysia by 1970-71, modifying our commitments
accordingly, while not committing ourselves now even for internal planning purposes to a date for eventual total withdrawal; or to plan on the earliest
practicable withdrawal from Malaysia and Singapore and to establish a minimum presence in Australia. If the latter alternative were adopted, there was the further question of whether the planning date for complete withdrawal
from Malaysia and Singapore should be 1975-76, or whether there should be a
study to see if an earlier date would be practicable; and, secondly,
whether this date should be published not later than the middle of this
year. The point was also made that the note should not make it appear that
Ministers needed to decide between these alternatives either now or in
1970-71; as the situation developed it might be possible to decide before 1970-71 to fix a date for total withdrawal, even if no date were fixed now.
On the other hand, it was argued that serious difficulties for the Ministry
of Defence, particularly for the future planning of the naval shipbuilding programme and the size of the Army would be involved in postponing decisions
on the Far East. If a firm planning date of 1975-76 for total withdrawal
were fixed now, larger savings, perhaps of the order of £20 million, could be achieved by 1970-71 than if no firm planning date were fixed, and there would then be a much higher rate of saving in subsequent years.
The note
should also point out that the savings to be obtained from a reduction of about half our forces in the Far East would be somewhat greater, possibly by about £20-25 million, in the years immediately following 1970-71, than in 1970-71 itself. It was important also to establish that the estimate of £100-125 million savings likely to result from the assumptions of the studies was on the same basis as the original figure envisaged of
£200-300 million. The latter estimate made no allowance for transitional expenditure on the defence budget, nor for additional economic aid necessary to mitigate the consequences of our reductions in the countries affected.
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