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Military policies

The Curtin government agreed that the Australian Army's I Corps – centred on the 6th and 7th Divisions – would be transferred from North Africa to the American-British-Dutch-Australian Command in the Netherlands East Indies for the defence of Java and Sumatra. Before they could arrive, Singapore fell on 15 February 1942. Most of the 8th Division was taken into captivity, although a small number, including its commander, Major General Gordon Bennett, managed to escape. "The fall of Singapore", Curtin announced in a radio address to the nation on 16 February, "can only be described as Australia's Dunkirk. It will be recalled that the fall of Dunkirk initiated the Battle for Britain. The fall of Singapore opens the Battle for Australia. On its issue depends not merely the fate of this Commonwealth but the frontier of the United States of America and, indeed, all the Americas and, therefore, in a large measure the fate of the British-speaking world."

The Japanese threat was further underlined on 19 February, when Japan bombed Darwin, the first of many air raids on northern Australia. Churchill attempted to divert I Corps to reinforce British troops in Burma, without Australian approval. Curtin insisted that it return to Australia. Roosevelt supported Churchill, offering to send an American division to Australia instead, while the Chief of the Australian General Staff, Lieutenant General Vernon Sturdee, threatened to resign if his advice was ignored and the troops were diverted to Burma. Curtin prevailed, although he agreed that the main body of the 6th Division could garrison Ceylon.

In the 1943 Australian federal election campaign the following year, Curtin was forced to publicly defend his decision. "Had we held Rangoon, or had we even held the district, of Akyab ", media magnate Keith Murdoch wrote in an editorial on 13 August 1943, "we would have held the door to the vast manpower of China and the jumping-off fields for the devastation of Japanese cities. Multitudes of the finest lives of Australia, Britain, and America would have been saved; the long years of toil, death, and separation, which assuredly stretch ahead, would have been shortened."

Curtin formed a close working relationship with the Allied Supreme Commander in the South West Pacific Area, General Douglas MacArthur. Curtin realised that Australia would be ignored unless it had a strong voice in Washington, D.C., and he wanted that voice to be MacArthur's. He gave over control of Australian forces to MacArthur, directing Australian commanders to treat MacArthur's orders as if they came from the Australian Government. Biographer John Edwards wrote:

A lesser Australian leader might have grated against MacArthur's vanity, cavilled at his assumption of command, contradicted his grandiloquent claims, satirised his manner. Curtin did not. He seized the chance to share authority with MacArthur, refused to offend his vanity, drew him as close as he could. Of Curtin's military decisions, it was the cleverest, most fruitful, most abidingly successful.

By mid-1942, the results of the battles of the Coral Sea and Midway had averted the perceived threat of invasion. Despite the "beat Germany first" policy, 346,000 Americans were fighting in the Pacific in 1942. Curtin had previously opposed conscription for overseas service during World War I, and again in 1940 when it was introduced by Menzies, although he had supported softening it to allow conscripts to serve in Australian territories.

Curtin recognised that the restriction of the Australian conscripts to Australia and its territories was morally indefensible and politically unviable. To remove what was now a major obstacle to the government's re-election prospects, he moved to remove the restriction. While there was support from the Communist Party of Australia and its sympathisers, there was trenchant opposition from the Catholic Church, represented by B. A. Santamaria and Arthur Calwell. Ultimately, the Defence Act was amended so that conscripts could be deployed outside of Australia to "such other territories in the South-West Pacific Area as the Governor-General proclaims as being territories associated with the defence of Australia".

The stress of the war and especially this bitter internal battle within Labor took a great toll on Curtin's health, which had never been robust even at the best of times. He had suffered all of his life from stress-related illnesses, and depression; he was also a heavy smoker.