The Second World War marked the most sustained military effort Australia had ever produced, one that proved impossible to maintain. As noted, the Australian government began demobilisation of the forces even before the end of the war, recognising that the country could not support the three services at their existing strengths and also meet the manpower needs of industry and agriculture. Much thought had been given to the needs of postwar reconstruction, again well before the conclusion of hostilities. John Dedman had been made Minister for Post-War Reconstruction in the Curtin ministry in 1945, and received the Defence portfolio in addition following the re-election of the Chifley government in 1946. The administrative and policy-making tensions which existed between the two areas were thus expressed in the person of a single minister, and senior officers subsequently noted that Dedman seemed far more interested in the task of building a postwar Australia than he was in defending it.

The Australian government faced three immediate problems in September 1945. The first, and most obvious, involved the demobilisation and repatriation of Australian servicemen scattered across the South-west Pacific Area, in Britain, and in prison camps in Europe, Manchuria, Formosa and Japan itself. The second involved the provision of forces to take part in the occupation of Japan in concert with the Americans and other victorious allied powers.