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(ii) The Raging 3flthofpit is already behindhand. PagetHi Bilohiy of Sydney has no sewerage and half of Brisbane is in a similar position. On the top of that every immigrant family has to be catered for with house, school, hospital and the like so that pressure on labour and materials and consumer goods is all the time being intensified.
35. So long as these conditions persist and until the people are willing to work harder or moderate their wage demands the country will balance precariously on the edge of inflation and will be in perpetual trouble with its overseas account. The people have so clear an idea of the social and economic goal which they mean to reach that they may take the necessary action in time but it is probable that they will have to be taught a sharp lesson. The hope is that it will be short in duration. If wool prices fall the general position would deteriorate quickly. Happily they seem to be firm and if they were to rise, which is by no means impossible, the position would be greatly eased.
36. I was particularly on the watch to discover whether Australian dependence on American military support in the Pacific and the influx of American capital is adversely affecting the Australian outlock towards Great Britain.
37. To-day the answer is that it is not. But with the increasing number of immigrants from Europe, the strategic dependence on the United States and the growing interest of American business in Australian prospects there is a widespread fear that our two countries may gradually drift apart.
38. The Australian regards that possibility as nothing short of a tragedy and there is an insistent demand for more British immigrants (only 33 per cent. of the total come from the United Kingdom) and more British capital and the most effective British representation at all levels.
39. In the particular field of security Government circles clearly set great value on A.N.Z.U.S. They would like to see the United Kingdom associated with it but they will do nothing which might conceivably upset the Americans. They are disappointed at the Americans' recent refusal to discuss detailed plans for the defence of South-East Asia and think that they have been misled, but their protests, if any, will be gentle.
40. My colleagues are aware of certain tentative proposals put to me by Mr. Menzies for associating the Americans with A.N.Z.A.M. I found a general readiness to agree that A.N.Z.A.M. is valuable and a ready acceptance of our assurances of the part we mean to play in the defence of Malaya among all Ministers, with the unfortunate exception of Sir Philip McBride, the Minister of Defence.
41. Politically the country is unsettled because they are never free from elections. Elections to the Federal Parliament and to both Houses of the State Parliaments mean that politics are always in the newspapers and always on the air. The State Parliaments, irrespective of which party is in power, spend their time roundly abusing the Federal Parliament and Federal Ministers who control
taxation.
42. This situation makes it extremely difficult to govern effectively from the centre especially as the State Governments have enough powers to baulk the objectives of Federal Legislation when they feel so inclined. The people must have an acute political sense and an extraordinary balance to work the system at all.
43. Visits from British Ministers are very welcome; the more Ministers that can go, at well-spaced intervals, the more harmonious our relations will be. This is equally true of New Zealand.
44. I shall hope to discuss in more detail matters involving Defence, United Kingdom representation in Australia, the prospects for British industry, delivery dates and the quality of British-exported goods and migration with those of my colleagues most closely concerned.
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