Canberra, 20 July 1962
Confidential
Australia: Review of Woomera Joint Project Arrangements; 1962
The Right Honourable Peter Thorneycroft,1 M.P., then Minister of Aviation, visited Australia between 25th June and 7th July for discussions with Australian Ministers in Canberra about the financial and other arrangements for the future operation of the Woomera Joint Project, the existing arrangements having expired on 30th June, 1962. Mr. Thorneycroft was preceded by an official delegation from his Ministry, led by Mr. D. W.G.L. Haviland, C.B., one of its Deputy Secretaries.
2. As I have already reported in my telegram No. 561, the Ministerial and official talks were completed on 5th July, with results which can be regarded as very satisfactory. I now have the honour to enclose, for the record, the following documents,2 which include the Minutes of the talks, both official and Ministerial, and the Memorandum of Arrangements now agreed for the five-year period beginning 1st July, 1962, in the form finally approved by Mr. Thorneycroft and Mr. Menzies:
(i) Minutes of officials’ meeting, 27th June (morning).
(ii) Minutes of officials’ meeting, 27th June (afternoon).
(iii) Minutes of officials’ meeting (Departmental Expenses), 27th June (morning).
(iv) Minutes of officials’ meeting, 28th June.
(v) Joint submission to Ministers, 2nd July.
(vi) Minutes of Ministerial Meeting, 5th July.
(vii) Minutes of officials’ meeting, 5th July.
(viii) Minutes of officials’ meeting, 6th July.
(ix) Memorandum of Arrangements for next five-year period.
3. To those familiar with the correspondence which took place towards the end of 1961 and early in 1962 between the two Governments at Prime Minister level on the future of the Joint Project, the satisfactory outcome of the talks just concluded must seem a matter not only for congratulation, but also for some surprise. Had they taken place a month earlier, as was at one time proposed, during the absence in London of Mr. Menzies, there is no doubt in my mind that there would have been a very different story to be told. I and my staff have reported in detail to our Department over the past months the bitterness and resentment felt by some Australian Ministers, not excluding Mr. Menzies himself, about what they regarded as the unsatisfactory outcome for Australia of the discussions held in London last year which led up to the rather reluctant signature by Australia of the European Launcher Development Organisation (ELDO) Convention. As these reports made clear, Australian Ministers undoubtedly felt, whether reasonably or unreasonably, that they had received, following the negotiations with the other ELDO Powers, a very different package from the attractively wrapped gift parcel which they thought had been offered to them by Mr. Thorneycroft in his discussions in Canberra in 1960 (my despatch No. 16 of 27th September, 1960, refers).3 Rightly or wrongly, they had at that stage persuaded themselves that, in return for making Woomera available to the proposed ‘space club’ they would, without further cost to them, become members of a space organisation which would over the years develop a commercially exploitable system of satellite communications from which they would profit. They were thus very disappointed at what they actually got, i.e., free membership, for the initial five-year programme only, of what was in effect merely a launcher development club, with no guarantee that they could go further into space research and enjoy any resultant commercial benefit without further cash contribution. They blamed the British for having misled them and their piqued, but perhaps understandable, reaction was to announce a unilateral decision to cut their contribution to the Woomera Joint Project from £A.9 million (plus £A.0.5 million for Australian projects) a year for five years to £A.6 million a year for only three years. Indeed, some ministers were eager to reduce this contribution still further, and it was only the personal intervention of Mr. Menzies himself which maintained it at even the reduced level of £A.6 million.
4. But in the succeeding months a good deal of quiet probing and discussion took place between members of my staff, both here and in Melbourne, and officials of the Prime Minister’s Department and the Department of Supply, which I believe materially influenced the Australian attitude towards the Joint Project and helped to induce the quite remarkable change of heart, which became apparent a few days before the official talks began. There were of course a number of other and more important factors which also contributed to this change in the Australian attitude. One was the realisation by the Australians, when they came to study the balance sheet more calmly, of the advantages which they and the Australian economy generally derive from the Joint Project and their fear lest, as a result of their decision to cut their contribution to its cost, Britain might be tempted to reconsider the current and future level of activity at Woomera by transferring some British projects to Europe, perhaps to the Hebrides or to the NATO Range in Crete. Moreover, some of them had begun to appreciate that thought was being given in some British circles to the possible change of guided weapons policy which would result in our buying these increasingly expensive items of hardware off the American shelf rather than continuing ourselves to find the vast sums which the development of even a single weapon now demands. They had come to realise, too, that there was very little hope of profit to the range through the activities of the United States National Aeronautics and Space Administration (NASA) or ELDO or any other possible customer such as the French, amounting to more than a fraction of the contribution of Britain. They were influenced also by their own sense of fair play—some officials, particularly in the Prime Minister’s Department, had always felt that the unilateral decision to cut the Australian contribution by £A.3 million at short notice could be described as unreasonable, and even unjustifiable. Above all, the Prime Minister’s Department, worried about Anglo–Australian relations in the broadest sense, were anxious to get rid of the suspicions and doubts which have hampered the working of the Joint Project in recent years. Their aim was to get back to the original concept of Australia making a real contribution to the cost of the British Defence programme and to get away from the idea, strongly canvassed in some quarters here, that Woomera was an Australian asset which could and ought to be exploited in a way that would pay dividends to the Australian Treasury. Informal discussions on other questions which had given rise to difficulties, e.g., the question of Australian sovereignty over the range and its use by third parties, including ELDO, showed that there had in the past been considerable misunderstanding between the parties of their respective positions. The gap which had separated British and Australian thinking had thus been considerably narrowed before the British delegation arrived, and I think they found the ground well prepared for their discussions.
5. It was a main objective of the British delegation during the official level talks to restore the confidence, so severely shaken on both sides in recent months, and to revise the more co-operative attitude of previous years. Mr. Haviland and the other members of the delegation made special efforts in this direction, and the patience and urbanity they displayed during the discussions, even in the face of a certain amount of provocation and pinpricking from some Australian officials, paid off handsomely in the end. Officials in fact, in the course of two meetings, succeeded in reaching virtual agreement on most of the issues raised. Their recommendations were embodied in the joint submission by them to their respective Ministers (enclosure (v) to this despatch). (Officials did not, by agreement, discuss the question of the future level of the Australian contribution, at any rate not in any formal way, though there was in fact some quiet exploration by both sides of the kind of figure that Ministers might eventually consider to be right.)
6. After his arrival in Canberra, having studied the joint submission, Mr. Thorneycroft decided that, besides the question of the future Australian contribution reserved for Ministerial consideration, there were two other main points on which he should concentrate in his talks with Mr. Menzies and his Ministers. The first was to get established in Australian minds the so-called policy of interdependence, i.e., to get Australian Ministers to accept that, because of the increasing cost and complexity of guided weapons, it would become increasingly necessary for Britain to seek to share her financial burden with her NATO allies, and to get Australian agreement in principle that any weapons thus jointly developed with a NATO ally or allies could, when the time came, be tested and developed at Woomera. He also intended, depending on the outcome of the discussions on the Australian contribution, to present proposals for a new system of cost sharing designed amongst other objects, to lead to savings in the running of the range.
7. When he met Ministers on 4th July, Mr. Thorneycroft first developed the policy of interdependence. He explained that, for example, the development of the next surface-to-air guided weapon to be undertaken might cost as much as £100 million sterling. This was quite beyond the financial resources of Britain alone, and she hoped therefore to interest other NATO countries in sharing the cost. No projects involving NATO collaboration had as yet been established, but during the next five-year period Britain hoped to be able to bring on to the Woomera Range weapons which would have a varying, and in some cases considerable, degree of foreign participation. He explained that there were three possible categories of projects, viz.:
(a) British designed weapons with foreign financial support, but with a preponderance of British effort.
(b) Foreign designed projects with British financial support.
(c) Foreign projects with which Britain was not associated.
8. Mr. Thorneycroft then turned to the amount of the future Australian contribution, and said his understanding was that the proposed reduction was related to the Australian belief that the cancellation of Blue Streak (which had amounted to one-third of the then approved Woomera programme) justified a one-third cut in Australian expenditure. This, he said, was based on a misconception, since at the time of the cancellation of Blue Streak, Woomera was running at a cost of about £A.12 million per annum; since then, far from falling, as the Australians had apparently expected, the cost had continued to increase until it now stood at about £A.16 million per annum. In view of this, while accepting that Australia wished to make some reduction in her contribution, Mr. Thorneycroft proposed that the effective cut should be reduced to £A.1.5 million. This would mean that instead of contributing £A.6 million as she now proposed, Australia would in future contribute a maximum of £A.7.5 million. Mr Thorneycroft also suggested that since it was now agreed, as a matter of principle, that Departmental Expenses, e.g., Department of Works charges, &c, were rightly debitable to the Joint Project account, the difference between these charges (which were being currently paid by Australia on normal Departmental votes) and credits accruing to the Joint Project, should in future be charged to the Joint Project. This amounted, on present rates, to some £A.l.2 million per annum. He suggested that, these charges having been paid in the past by Australia, it would be reasonable for her to continue to pay in future. If this were accepted, the total Australian maximum contribution would, over the next five years, amount to £A.8.7 million per annum.
9. Having explained these proposals to the meeting Mr. Thorneycroft then withdrew, and Australian Ministers discussed amongst themselves what reply should be given to him. I understand that even at this late stage there was some pressure from Ministers, particularly the Minister of Defence (who has a vested interest in keeping the Australian contribution to Woomera as low as possible, since it is a charge on his Department’s vote) to maintain their earlier position. But Mr. Menzies with, perhaps surprisingly, the support of Mr. Holt, the Treasurer, intervened decisively. He had returned from London convinced, as he has since told me, that British Ministers were putting up a strong fight in the Common Market talks with the Six in defence of Australia’s trade interests, and he had been somewhat reassured about the American attitude in his talks with President Kennedy. He was thus clearly in a mood, with these great issues in mind, to avoid any further misunderstanding with British Ministers over the relatively less important matter of the Joint Project. He therefore told his colleagues that, in his view, Mr. Thorneycroft’s proposals should be accepted as they stood in the wider interests of Australia. He subsequently told Mr. Thorneycroft that, though there was room for much argument on the merits of the proposals put forward, he himself was not disposed to argue them further and he and his colleagues had decided to accept them without more ado. He made it abundantly clear that in doing so he had been much influenced by his talks with British Ministers and his general reception in London and he expressed the hope that Mr. Thorneycroft would on his return put in a further good word for Australia with his Cabinet colleagues. During his brief stay Mr. Thorneycroft obviously succeeded in re-establishing a very good personal relationship with Mr. Menzies, and this may well be of some significance for the future, especially now that Mr. Thorneycroft has become Minister of Defence.
10. Officials were then instructed to draw up a draft Memorandum of Agreement (enclosure (ix)). In the course of drafting, it soon became apparent that the Department of Defence, who had throughout been the strongest proponents of a reduced Australian contribution and had been most insistent that foreigners should not, by participation in British designed projects, in effect get a free ride, at Australian expense, on the Woomera Range, showed some signs of wishing to try to regain some of the ground that they regarded as lost in the Ministerial discussions. While they accepted that British designed weapons with a preponderance of British effort should be treated as normal Joint Project items of expenditure, they wished to insist on consultation with Australia about the financial terms on which British designed weapons in which foreign financial participation was predominant might be tested on the range. They clearly thought that, if some overall saving to Britain resulted from her association with a foreign Government, some part of that saving should be passed on to Australia, thus perhaps enabling her to reduce her contribution below £A.8.7 million. This argument was also supported on the wider ground that Australia could not risk being thought to be subsidising the production of weapons by foreign countries in Europe, especially in present circumstances when the Six were possibly being hard on Australian trade interests. Argument ranged over this point for the whole of one day, and when officials dispersed, on 6th July, it had still not been resolved, and some of the resentments and suspicions of the past year had begun to revive. However, following talks between Mr. Haviland, members of my staff and officials of the Prime Minister’s Department, the question was referred to Mr. Menzies, whose reaction was immediate and unhesitating. He made clear to his officials that, while he appreciated their zeal, he wished nothing to be derogated from the agreement he had made with Mr. Thorneycroft and that there was to be no attempt to reduce the value of the Australian contribution to the defence programmes either of Britain or of NATO, since both were in effect part of Australia’s defence.
11. The outcome of Mr. Thorneycroft’s mission can thus be described as entirely satisfactory. Nevertheless, potential difficulties continue to exist at official level, particularly on the increasingly important question of the terrns on which British designed weapons with foreign participation can be tested on the range. This will probably not amount to much during the currency of the present agreement, but it will certainly be raised when the time comes for the next financial review in 1967. Indeed, there are some grounds for believing that, if some such project were to be proposed in say two or three years’time, the Australians would expect to be consulted, since any such project would certainly extend beyond 1967 and would therefore fall under paragraph 4 of the Memorandum of Agreement. But that problem, it if arises at all, will be for the future. For the moment it can be said that the generally friendly and harmonious atmosphere of these talks, both Ministerial and official, should lead to a significant improvement in the working of the Joint Project over the next few years.
12. I am sending copies of this despatch to the British High Commissioners in Ottawa and Wellington, and, in view of its possible interest in the ELDO context, to Her Majesty’s Ambassadors in Paris, Rome, Bonn, The Hague, Brussels and Copenhagen (all without enclosures). 4
1 Thorneycroft was British Secretary of State for Defence, 1962–64.
2 Not published.
3 See Document 2.
4 Woomera continued on an operational basis until existing agreements expired in June 1976. It was then placed on a care and maintenance basis. Recommending this to Cabinet in July 1974, Lance Barnard, Defence Minister in the Whitlam Government, argued that the joint project had not benefited Australian defence directly to the full value of its contribution. The UK was still a valued and important ally, but it was not policy to maintain a special relationship; ‘we seek a more mature and pragmatic relationship, allowing us to make decisions which take full account of our own interests provided we give due and proper notice of our intentions’ (NAA: A5915, 1218, submission, Barnard, July 1974).
[UKNA: DEFE 11/245]