My Prime Minister and my Minister of Defence have just returned
from the Five-Power Conference in Kuala Lumpur. This meeting was
concerned with the profound implications of Britain's withdrawal for
the future security of South-East Asia and the Pacific. You will be
invited to discuss what this may mean for New Zealand, and also to
review the work of the conferences held in this building in April of the
SEATO and ANZUS Councils, and of the Foreign Ministers of the
countries allied in the defence of the Republic of Vietnam.

Vietnam is still the focal point of communist aggression and sub-
version in South-East Asia. Last year my Government accordingly
increased its military assistance to the Republic of Vietnam, where
New Zealand units are operating with the Australian Task Force. It
has also continued, in consultation with its Allies, to seek a peaceful
solution to the conflict. It does not expect this to be quickly or easily
attained. My Ministers are nevertheless maintaining the closest
consultations with New Zealand's Allies on the course of the Paris talks.

My Government is participating fully in the work of the United
Nations and in the diverse activities of the Commonwealth.

In the United Nations General Assembly it has supported the
adoption of the treaty to prevent the spread of nuclear weapons. It
continues to attach great importance to the peace-keeping functions of
the Organisation.

In the year which marks the twentieth anniversary of the Universal
Declaration of Human Rights, my Ministers place special emphasis
on the ability of the Commonwealth to demonstrate that the prejudice,
and the racial, national, and economic barriers which divide nations
can be surmounted.

The visit which the Prime Minister of Australia, Mr Gorton, paid
to New Zealand at the end of March underlined the high value which
both Governments attach to the further development of their close ties
of friendship and mutual understanding. It provided a most welcome
and timely opportunity for the discussion of matters of common interest.

Valuable capital and technical aid continues to be given by New
Zealand to many countries of Asia, the Pacific, and Africa under both
bilateral and multilateral arrangements and also through the important
work of voluntary agencies such as CORSO and Volunteer Service
Abroad.

My Government has recently announced that, for the next 3 years,
it will maintain at a high level the financial assistance it has been giving
to the Cook Islands, Niue, and the Tokelau Islands. In March, on the
occasion of the visit of the Prime Minister of Western Samoa, my Prime
Minister also announced that the programme of aid to that country,
in education, technical assistance, and administration, will be carried
forward until 1971.

A Bill to give effect to the 1961 Vienna Convention on Diplomatic
Relations will be presented for your consideration.

During 1967 the national economy responded to the measures taken
by my Government to restore the balance of payments, following the
collapse of wool prices, and to moderate the previously excessive rate of
growth of internal demand. The difficulties facing New Zealand were
nevertheless aggravated by the continued low level of export prices.

More recently, since the devaluation of the New Zealand dollar to
parity with the currency of Australia, there has been a distinct improve-
ment in the level of overseas reserves. Production for export has
continued to increase and some export returns have improved. New
Zealand's manufacturing industries are now in a better position to
compete with those of Australia.

It would be premature to assume that the period of adjustment is
over. My Ministers are confident, however, that given firm but flexible
economic policies the improvement in the balance of payments can be
sustained.