GOVERNMENT SAVINGS PACKAGE A SENSIBLE RESPONSE

"The Government's $315 million savings package announced today will reinforce the Government's surplus and help New Zealand to build on the gains of the past decade," Prime Minister Jenny Shipley said today.

"This package is the second stage of the Government's three point response to the Asian Economic Situation. In the short term the downturn in Asia is reducing New Zealand's growth rate and the tax revenue which the Government had previously expected. The savings announced today will help buffer the Government against this loss of income.

"The first stage of the Government's three point plan, announced in the 1998 Budget deferred $300 million in spending and announced a major programme of measures to improve New Zealand's export competitiveness and reduce consumer prices.

"This programme, which includes lower energy prices and competition in ACC, will help New Zealand businesses compete overseas and retain and create new jobs for New Zealanders at home.

"The third stage of the three point plan occurs in early September, when new economic and fiscal forecasts are presented and the Government will review whether further steps are needed to ensure that New Zealand's interests are protected.

"This is a demanding time. Ministers have worked carefully and constructively to put this savings package together. While the Government has improved the economic fundamentals over the last few years, we have to continue to be on the front foot. The Government has and will continue to closely monitor the global impact of the Asian economic situation.

"We must create jobs and achieve our social goals for the next generation of New Zealanders through sustainable, ongoing export-led economic growth. The Government will continue to consider all options for assisting and enhancing that recovery," the Prime Minister concluded.