On 10th February I attended, by the Attorney-General’s direction (in his unavoidable absence), a meeting of the Cabinet Sub-Committee appointed to consider the various Snowy River Diversion Schemes. There were present the Treasurer, and the Ministers for Defence, Interior, Post-War Reconstruction, Supply and Development, Shipping and Fuel and Works and Housing together with, in each case, their departmental officers.

(2)  The object of the meeting was to consider the policy to be followed on behalf of the Commonwealth at the meeting of the Commonwealth and State Ministers, to be held in Canberra on 14th February.

(3)  The meeting was strongly of opinion that the full development of the Snowy Mountains area water and power resources was a matter of urgent national importance. Of the various alternative schemes of development, the meeting unanimously favoured the Snowy–Murrumbidgee–Tumut plan, together with the diversion of the final third of the Snowy Waters into the Murray, on the specific understanding that the water could there be used for irrigation on the New South Wales side of the River.

(4)  Having regard to the urgency of obtaining additional supplies of power, and of establishing large power stations in a less vulnerable position than the present main stations in Eastern Australia, the meeting was also strongly opposed to any attempt to establish the necessary planning and construction authorities on a tripartite Commonwealth–New South Wales–Victoria basis, comparable with the arrangements existing under the River Murray Agreement. The meeting unanimously preferred a single authority under Commonwealth control.

(5)The meeting thought that efforts should be made to obtain agreement with the two States along these lines, and the general opinion seemed to be that there was a reasonably good chance of securing it. Ministers were confident of Victorian support, and the fact that the scheme now recommended was essentially a New South Wales scheme, (with a variation (as to the final third of the water) which would still benefit New South Wales, would greatly assist in securing New South Wales support also.

(6)  I was asked to express an opinion on the constitutional aspects of the proposal to carry out the entire work under Commonwealth authority, legislative and administrative. I pointed out that the only available support would be the defence power. From the point of view of defence the plan was being put in two aspects:

(a)  broadly, that the existing sources of power in Australia were insufficient in volume and vulnerable in location; that it was necessary to take steps to make possible an expansion of defence industries without crippling ordinary civilian production and impairing civic and domestic uses of power; and accordingly that this scheme (both as regards the constructional works and as regards the production and distribution of electricity) was a legitimate means plainly adapted to purposes of defence—the fact that the plan could secondarily serve other purposes as well (e.g. irrigation) being immaterial.

(b)  more specifically, that the increased supplies of electric power were likely to be necessary for specific defence undertakings and that the additional supplies of power could not be obtained from the present resources without crippling other community activities.

(7)  In the present state of information it appeared to me that argument (b) above was still too much in the contingent stage to provide a certain basis for the necessary legislation. The High Court might well think that the plan as a whole was in substance directed towards purposes other than defence, and the Court might be disposed to treat the assistance rendered to specific potential defence undertakings as purely subordinate and incidental. The broader argument, as in (a) above was designed to meet this difficulty. I did not think that the High Court could by any means necessarily reject such an argument. Much would depend however on the general international position at the time of any challenge and on the amount of relevant information which was available to the Court. In the circumstances I thought the Government could not but regard the support of the defence power as anything but doubtful, in the immediate future at any rate. The longer a challenge could be delayed however, and the more specific the link between the undertaking and Australia’s defence programme could be made, the greater the probabilities of success if a challenge took place.

(8)  I said that all doubt could of course be removed by securing an agreement with the two States concerned as to the plan to be carried out, and a reference from each of the two Parliaments, under section 51(xxxvii) of the matter of carrying out the agreement.

(9)  The Prime Minister said that Ministers appreciated the elements of doubt in the constitutional position. The decision however was to push ahead strongly with the scheme in the hope of obtaining positive State support. The Minister for Works and Housing expressed the view that if the work could once be got fairly under way, and were then challenged (e.g., as I had suggested, by some private citizen whose land was being expropriated) there would be a much more substantial chance of securing State legislation at that stage than there would be at the outset.

[Vol. 38, p. 242]