AUSTRALIA TODAY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79T00826A001300010046-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 9
• Document Creation Date: December 15, 2016
• Document Release Date: July 14, 2004
• Sequence Number: 46
• Publication Date: October 11, 1966
• Content Type: IM

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11 October 1966
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INTELLIGENCE MEMORANDUM
AUSTRALIA TODAY
I
Copy No.
DIRECTORATE OF INTELLIGENCE
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This Document contains information affecting the Na-
tional Defense of the United States, within the mean-
ing of Title 18, Sections 793 and 794, of the U.S. Code, as
amended. Its transmission or revelation of its contents
to or receipt by an unauthorized person is prohibited
by law. The reproduction of this form is prohibited.
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 Approved Fors,
CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
11 October 1966
INTELLIGENCE MEMORANDUM
Australia Today
Summary
Like neighboring New Zealand, Australia's po-
litical structure is similar to the British parlia-
mentary system and its standard of living. is among
the highest in the world. The economy, which is
recovering from a recent slowdown, is fundamentally
sound despite modest unemployment increases over the
past several months and a decline in home construc-
tion and automobile sales, Foreign policy tradition-
ally has been determined by London, but Australia
is showing signs of a growing maturity and is be-
ginning to assert itself both as a regional and
international forces Recent developments in South-
east Asia and Britain's decision to reduce its mili-
tary presence east of Suez have caused national
leaders to focus greater attention on defense needs,
to advocate collective security, and to rely more
heavily on the protective influence of the United`
States. Nonetheless, Australia continues to con-
duct a very limited trade in nonstrategic goods
with Communist nations while opposing Communist ex-
pansion,
Note; This is one of a series of memoranda produced
by CIA on those countries to be visited by
President Johnson. It was prepared by the
Office of Current Intelligence and coordinated
with the Office of National Estimates and the
Office of Research and Reports.
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The Political System
1. Australia is an independent dominion
within the Commonwealth, and its governmental',
structure is patterned after the British par-
liamentary system. The governor-general, as the
Queen's representative, possesses broad theoreti-
cal powers as chief of state, but the center of
power lies in a bicameral parliament. Executive
authority is vested in a prime minister and a
cabinet, responsible to parliament. Australia
has fundamentally a two-party system: the ruling
coalition of the Liberal Party, led by Prime
Minister Harold Holt, and the Country Party,
whose chief spokesman is Deputy Prime Minister
and Minister of Commerce and Industry John McEwen;
and the opposition Labour Party (LP).
National Elections
.2. National elections are scheduled to be
held next month. The ruling coalition led by
Prime Minister Holt since Sir Robert Menzies
retired last January, will be pitted against the
Labour Party (LP). The elderly Arthur Calwell,
target of a recent unsuccessful assassination
attempt, heads the opposition LP. Calwell was
able to overcome a challenge to his leadership
last spring by Gough Whitlam, but the intraparty
struggle may well be resumed in the postelection
period, The government coalition now occupies
half of the 60 Senate seats, the LP 27, and the
Democratic Labour Party two. The other seat
is occupied by an Independent. The government
coalition has a decisive majority in the House,
occupying 72 of its 124 seats,
3. The two central election issues are the
government's economic policies and Australia's
military commitment in Vietnam. In early Septem-
ber, Calwell promised that the LP, if elected,
would hold a referendum to win popular endorsement
for the regulation of prices and interest rates,
and would introduce legislation to restore quar-
terly cost-of-living adjustments to the basic
wage. He seems to have chosen a poor platform,
since the present government was voted into office
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17 years ago precisely because it insisted upon abol-
ishing controls like those Calwell would now reimpose.
4. Vietnam has emerged as the central issue
in the campaign. Almost immediately after Holt be-
came prime minister in January, he announced his
intention to increase the size of the Australian
task force in Vietnam to 4,500 men, approximately
30 percent of whom would be conscripts brought into
the services under the conscription law enacted in
1964. This increase is now in process. Calwell
has seized vigorously on the conscript issue to at-
tack the government's Vietnam policies, and is
hoping to exploit it fully in a series of major
policy speeches.
5. Although the elections are only about six
weeks away, the campaign has not produced much
popular enthusiasm, and the public's position on
Vietnam and conscription remains somewhat uncertain.
Recent public opinion surveys have shown popular
opinion on Vietnam to be swinging behind the gov-
ernment, although polls last spring indicated that
possibly as much as 57 percent of the electorate
opposed the use of conscripts in Vietnam. This may
be attributed mainly to the improved military and
political situation in Vietnam, the surprisingly
heavy participation in the Vietnam election, and
more active "salesmanship" by the Holt forces. If
these trends persist and the Australians do not
experience heavy casualties before the election, the
government coalition probably will be returned to an-
other three-year term.
Economic and Financial Affairs
6. The Australian Government energetically
promotes a policy of national development and indus-
trial growth. The recent enactment of a more lib-
eral immigration policy and the promotional efforts
of the government to lure immigrants to Australia
are closely associated with these objectives. Gen-
eral economic activity remains at a high level, but
the annual growth rate has slowed somewhat from a
level of about six percent which prevailed from fis-
cal years 1963 through 1965. A decline in automobile
sales and in home construction, as well as a modest
increase in unemployment, are causing some concern.
The economy is basically sound, however, and no really
serious difficulties are anticipated in the foresee-
able future.
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7, The role of foreign investment in
Australia is under discussion and has led to some
division within the ranks of the government
coalition. Deputy Prime Minister McEwen has
emerged as the spokesman for those who would
adopt a more nationalistic line toward overseas
investment. On the other hand, Prime Minister
Holt encourages the flow of foreign capital to
Australia, and it is unlikely that this policy
will change over the next few years,
8. Australian economic initiatives in
recent months have encountered some spirited
opposition from abroad. Controversial initia-
tives include: an expanded "free trade agreement"
with neighboring New Zealand and the extension
of selective tariff concessions to the lesser
developed countries.
9. Australia has also been increasing its
modest external aid programs, although the prin-
cipal recipient continues to be the Territory of
Papua and New Guinea, for which Australia has an
administrative responsibility. Aid appropriations
for 1965-66 amounted to about $114 million, 0.6
percent of its national income. Canberra has
membership in the Development Assistance Committee
of the Organization for Economic Cooperation and
Development, the Colombo Plan, and the newly
created Asian Development Bank,
10, Australia conducts a limited trade in
nonstrategic goods, mainly wheat, with the Commu-
nist countries. However, the country's total
trade with the Soviet Union and mainland China
for FY 1966 amounted to only about $200 million,
a decline of about $66 million from the preced-
ing year.
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11. Like neighboring New Zealand, Australia
traditionally has relied on its Commonwealth ties
for security, and has not been compelled to develop
a sophisticated defense system of its own. How-
ever, developments since World War II, particu-
larly in South and Southeast Asia, have led to a
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reassessment and subsequent recasting of Australian
policies and to membership in ANZUS and SEATO. The
Commonwealth association-persists, but the United
States, rather than Great Britain, is regarded as
Australia's "shield" and the vital key to the
collective security of South and Southeast Asia.
12, Australia embraces and identifies it-
self with US policies in Southeast Asia, and has
committed troops to the defense of Malaysia as well
as South Vietnam, The government can be expected
to assume expanded regional responsibilities in the
future, particularly as Britain reduces its mili-,
tary commitments east of Suez. Consequently, de-
fense expenditures, now amounting to 12.4 percent
of the budget and 3.5 percent of the GNP, will be
increased considerably, In fact, the defense ap-
propriation for 'Y 1966 amounted to some $966 mil-
lion, an increase of 27 percent over the previous
year. The defense establishment presently totals
nearly 60,000 men, about half of whom are in the
army.
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