Melbourne, 6 August 1954
May I draw your attention to the following points arising from the discussion on the budgetary appropriation for 1954–55 for the Colombo Plan and other forms of international aid.
From the total appropriation of £5,500,000 now agreed upon under this heading, I propose to apply to Colombo Plan Economic Development £3,950,000. Should we expend exactly that amount, this would mean that we would have fulfilled £13,250,000 from the total pledge of £31,250,000 which we made in 1950 to cover a six years’ period ending in mid-1957. Similarly, from this year’s appropriation I hope to apply about £550,000 to Technical Co-operation under the Colombo Plan, which would mean that by mid-1955 we would have made good about £1,225,000 from our original pledge of £3,500,000.
These figures show that if we were to try to live up to our publicly announced obligations we would have to incur, for the two years then remaining of the present Colombo Plan (1955–56 and 1956–57), expenditure at a rate greatly exceeding that in the current and preceding years.
My interpretation of our recent discussions in Cabinet is that the Government is unwilling to contemplate spending at a substantially increased rate under this heading. If this is the case, I have no alternative but to plan accordingly. In the difficult situation in which I find myself, my practical suggestion is that we should perhaps not contemplate fulfilling our present pledge by mid-1957 but by mid-1959. Such an extension of two years in carrying out our present obligations could possibly be explained to the other participants in the Colombo Plan in terms of the initial difficulties of all concerned in getting the Colombo Plan under way and the length of time required between formulating projects and being able to order, produce and pay for the equipment involved.
To fulfil our pledge, even within this extended period, requires forward planning and financial commitments which, in the case of a number of items of economic aid, fall due beyond a current financial year. Assuming that by mid-1955 we have spent our appropriation for Colombo Plan aid for this year, namely £4,500,000, the average required annual expenditure for the following four-year period (mid-1955 to mid-1959) would be approximately £5,060,000.
A further point requiring consideration is that at the Colombo Plan Ministerial Conference, due to take place in Ottawa in October of this year, it is likely that the question will be discussed of the continuation of the Colombo Plan beyond the present limit of mid-1957. Australia took a leading part in initiating the Plan in 1950 and the conditions in South and South-East Asia which led to our decision in that year apply today in an even more serious and important degree. Moreover, in view of the support which the Australian Government is giving to plans for a South-East Asia defence organisation, it is important that we should not lag behind in schemes for non-military aid to the area which have more appeal to a majority of the governments concerned.
At this stage one cannot foresee whether a further co-operative effort for economic development and technical assistance to South and South-East Asia would in fact be continued either under the present Colombo Plan structure or under some other machinery. We should, however, be in a position at the Colombo Plan Ministerial Conference at Ottawa to inform the Conference that the Australian Government would support a move for the maintenance, under the aegis of the Colombo Plan, of economic aid programmes in the area after the present expiry date, subject to the adequate participation of other contributing governments.
May I conclude by remarking that all of the above should be read in the context of the present circumstances of our existing obligations under the Colombo Plan and the Government’s attitude towards expenditure. We must face the possibility, however, of being confronted in the future by a new and urgent situation in which there may be obligations on us and others arising out of the prospective South-East Asian Treaty to increase the volume of economic aid now being directed to the South and South-East Asian countries. In such a case I am sure you would agree that the situation would have to be re-examined by Cabinet.
I should be glad to know whether the general approach 1 have outlined to this problem would have your approval. I am sending copy of this letter to the Prime Minister.
[NAA: A10299, Cl5]