Priority One CEO Andrew Coker is welcoming claw backs in the 2011 Budget, but believes ‘middle income' earners in the Western Bay of Plenty will suffer.

Finance Minister Bill English announced a raft of cost saving measures in the Budget on Thursday afternoon.

Along with government cost saving changes to KiwiSaver, Working for Families and the student loan scheme, $5.2 billion from the public sector will also be ‘redirected' to core frontline services.

Andrew says the government is facing a 'substantial, structural deficit” that must be reigned in.

He says if the measures were not implemented, New Zealand faced a credit downgrade, forcing mortgage interest rates to rise, business costs to increase and higher consumer prices.

Andrew says the changes to Working for Families will hit middle income earners in the region.

'The Western Bay of Plenty has a substantial number of small businesses so any changes to Working for Families will be an issue for them.”

In his address to the house, Bill English supplied figures showing that since the beginning of the year, government has borrowed an average of $380 million a week.

Government wants to reduce that to $100 million next year and be in a position to repay debt by 2014-15.

It is hoped net debt will be eliminated by 2024.

'For a country that is determined to catch up, in terms of growth, with Australia, the deficit is a fundamental issue we have to deal with.

'At the same time build our skills base, build our investment in education and science and then play catch up.”

Andrew says the government's sale of some energy assets will have a positive impact on the economy.

'It will increase investment, create a positive investment environment and free up much needed cash for government initiatives and investment in infrastructure, which we need here.”