With the Japanese invasion of New Guinea and Papua during World War II, it is not unsurprising that the Labor Governments of John Curtin and Ben Chifley found it difficult to disentangle colonial from strategic interests. Acknowledging the difficulty, however, still leaves unanswered the important question: does this suggest an unwillingness to break with attitudes of the past, or did it provide the basis for colonial reform? Prior to the Japanese occupation of New Guinea and Papua, Australia’s strategic aspirations centred on the simple act of possession. After 1942 however, shocked by the lack of resistance to the Japanese advance in Southeast Asia and the Pacific, possession was no longer held as the sole criterion for security. The view of the Labor Government was that regional security could not be guaranteed unless it had ‘an adequate basis in economic justice’. In this essay, I argue that what marked the defensive concerns of the Curtin and Chifley Governments was precisely the degree to which Australian economic-strategic interests became entangled in a policy of colonial reform.