JAPAN NATIONAL PRESS CLUB, TOKYO

I first visited Japan in 1995 and I'm delighted to be back, especially as this is my first full overseas visit as Prime Minister of New Zealand.

Although my predecessors have made working visits to Japan, it is over 22 years since the last Official Visit to Japan by a New Zealand Prime Minister - Sir Robert Muldoon in 1976.

Then, we were still getting to know each other.

In 1976 only 9,276 Japanese tourists visited New Zealand. Last year 160,000 Japanese visited our country.

New Zealand's exports to Japan in 1976 were just over $300 million, or around 10 percent of today's level.

Today, our imports have climbed from $400 million then to nearly $3 billion.

Over this time, our relationship has matured. We now enjoy a high level of mutual understanding and trust.

New Zealanders have first hand experience of Japan, through studying your language, hosting exchange students and visitors in our homes, our 34 sister city links, or through the successful working holiday schemes.

Around 30,000 New Zealanders travel to Japan each year.

There are nearly 40 New Zealand Societies in Japan.

In short, at all levels, our relationship is now extensive and marked by friendship and growing ties at the political level, between business people, and between communities, families and individuals.

Although we are different societies, we both face common challenges.

With globalisation our economies are now more closely interdependent.

This is sharply demonstrated by the flow-on effect from the economic troubles some of our neighbours are experiencing.

We both need to remain open and competitive, across all sectors of our economies, if we are to improve our economic and social prospects.

The Asian economic troubles are affecting New Zealand businesses, especially in those sectors most exposed, such as forestry and tourism.

Fortunately, our economy is in good shape due to our reform efforts of the last decade. I am proud to be able to say that New Zealand is in its sixth year of solid economic growth.

Even taking into account the impact of the regional downturn, we still expect GDP growth over the coming year of around 2.7 percent or more.

We are steadily reducing official debt, which is now below 30 percent of GDP.

We have had five years of fiscal surpluses.

We have price stability with inflation well contained below 2 percent.

We have a competitive economy and we are on track to meet APEC's free trade and investment goal by and even before 2010.

I am sure this will continue to attract investment from Japan. We strongly welcome this.

Over recent years, there has been a keen interest from Japan in New Zealand's economic reforms.

Whilst I strongly believe that it is up to each country to decide on its own policies and reform path, we are pleased to share our reform experiences with others.

We hope our experience may be helpful as you pursue administrative reform.

My visit is an opportunity to discuss with Prime Minister Hashimoto the economic challenges in our region and the prospects for maintaining economic growth and stability.

And because Japan is New Zealand's second largest trading partner, and also sends us many tourists and students, I wanted to learn firsthand, about the changes under way in your own economy.

New Zealand is committed to the Asia-Pacific region.

Our sense of belonging and partnership is unaffected by the current economic situation.

This is a time for the region to work together, supporting the multilateral programmes of the International Monetary Fund.

New Zealand looks to Japan to take a continued leadership role through economic reform and the consolidation of your open economy.

Because the size of your economy is unmatched in the region, strong growth in Japan can and will assist regional recovery.

With respect to social change, both New Zealand and Japan face the same challenges, shifting family structures, ageing populations, changing roles of women and the need for highly skilled and flexible workforces.

These evolving shifts bring with them not only uncertainty but also opportunities.

In seeking social cohesion, both our countries are taking a fresh look at the role of governments in managing social change.

In New Zealand my Government is working on achieving consensus regarding the balance between Government and personal and family responsibility.

Prime Minister Hashimoto and I have discussed these issues.

I note with interest he explored many of these social themes in his speech to the Diet last month.

They are strikingly similar to the issues I raised in my policy statement on the Opening of Parliament a day later.

We have set five critical strategies in motion covering social responsibility, education, welfare, health and employment, in order to create greater social and economic opportunities for all New Zealanders.

I'm sure in the years to come we will share our social and economic policy experiences, as well as our experiences in such areas as conservation and environmental protection, education and the investment required to maintain a skilled workforce.

As we face these challenges, New Zealand and Japan can be dependable neighbours for each other, based on our shared aspirations.

I note Prime Minister Hashimoto recently described the peace and stability of the Asia-Pacific as Japan's most important foreign policy issue.

From New Zealand's perspective, we see Japan playing a steadying role in the region.

Achieving United Nations Security Council membership would add to your influence and New Zealand supports your quest for membership.

In APEC and the ASEAN Regional Forum, we shall be working side by side to ensure our region's stability is soundly built on sure foundations.

Next year, when New Zealand takes up the Chair of APEC, we will be relying on Japan to help us shape APEC for the 21st century as a grouping which can bring real economic benefits to all its members.

I am honoured that my visit this week will enable us to continue working towards this goal, while consolidating and building on the sound bilateral relationship New Zealand and Japan currently enjoy.

New Zealand values highly the relationships our two countries have established at the political, business, community and family levels.

Let us continue to work together to further enhance these relationships.