States of America. Relations with the Government of the United
States are intimate and friendly, and the first meeting of the ANZUS
Council in Honolulu last year, attended by my Minister of External
Affairs, has served to strengthen this association. It is the firm view
of my Advisers that the Treaty establishing this Council will be a
source of strength not only to the United States, Australia, and New
Zealand, but also to the British Commonwealth generally.

My Ministers continue to study the strategically important Middle
East situation. The transfer of No. 14 Ground Attack Fighter
Squadron of the Royal New Zealand Air Force to Cyprus, where
it is now serving with Royal Air Force and Australian units,
emphasises my Government's concern in the security and future of
this region. In addition, Hastings long-range transport aircraft are
undertaking regular flights from New Zealand to the Middle East
and the United Kingdom in support of the fighter squadron. These
flights also afford valuable training for the transport crews.

The efforts of the people of France and Vietnam to restore order
in the Associated States of Indo-China are regarded with special
interest by my Advisers. This struggle against Communist-inspired
insurrection has involved great sacrifices for the Government and
people of France. As an earnest of New Zealand's interest, a quantity
of arms and ammunition was made available last year to the French
Forces there.

The Compulsory Military Training Scheme, now in its third year,
is proving successful in every way. My Ministers consider that
measures to secure military preparedness for any emergency are
essential and that the trained reserves now being built up will enable
New Zealand to make an effective contribution in the defence of the
nation's interests.

In fulfilment of the obligations which New Zealand has assumed
in the United Nations Charter all possible measures are being taken
to promote the advancement and welfare of the island territories
under the jurisdiction of New Zealand. Following the visit of the
Minister of External Affairs to Western Samoa last year, my Government
has recently announced important steps which it proposes to
take in the political, economic, and social spheres of Samoan
administration, with the ultimate objective of establishing a system
of self-government in the territory. It will no doubt be regarded as
a bold step. My advisers are confident, however, that the Samoan
people will, as in the past, prove worthy of the trust now being
reposed in them and that the goal of their ambitions is within
measurable range.

As a further mark of the goodwill towards the Samoan people,
my Government is now considering ways and means of handing over
to them the ownership and control of the New Zealand Reparation
Estates, concurrently with the establishment of self-government in
the territory.

In December last my Prime Minister attended an Economic
Conference in London convened by the Prime Minister of the United
Kingdom. A wide measure of agreement was reached there on policies
designed to increase the financial and economic strength of the Commonwealth.
The broad plan prepared by this meeting has already
been discussed with the United States and is now the subject of
consultation with the countries of Western Europe.

In accordance with the general understanding reached at the
London Conference, my Advisers are pursuing policies that will
enable New Zealand to make a worthwhile contribution to the overall
balance-of-payments situation of the sterling area. It is of vital
concern to the whole world that the sterling area should continue
to recover its strength and influence in world trade.

For the year now drawing to a close the volume of production
may well be a record. With prices for meat, dairy produce, and
wool at satisfactory levels, the current season should be a prosperous
one for New Zealand.