Labour may look at controlling immigration as a way to affect housing demand and general price inflation.
In the small print of Labour’s monetary policy documents, the party says “there may be a case for varying inward migration and/or work permits in a counter-cyclical manner”.
Labour finance spokesman David Parker yesterday announced a new monetary policy tool for the Reserve Bank – a variable savings rate that would allow contribution rates to KiwiSaver to be adjusted as an alternative to raising the official cash rate, which governs interest rates.
Labour would make KiwiSaver compulsory if it won this year’s election.
Parker also announced plans to broaden the bank’s objectives to target the current account to promote jobs and growth, as well as the traditional focus on stable prices.
The moves were among a raft of changes to monetary policy Labour proposed to lower interest rates and tackle the high New Zealand dollar.
The issue of immigration, particularly where it might drive house prices and inflation, has also been an issue NZ First leader Winston Peters has focused on.
The Labour documents say immigration tended to be “pro-cyclical, with higher net inwards migration coinciding with strong local economic conditions”.
Labour was open to investigating whether that cycle could be reversed – letting more immigrants into New Zealand when the economy was weaker, and tightening controls during high-growth periods.
“This would require consideration of a range of factors, including the lag time between approval and arrival, the wage effects of inward migration at times of supply constraints, and the need to meet skill shortages,” the documents said.
Prime Minister John Key this afternoon dismissed the idea, saying it wasn’t the way to address the problem.
“That’s an interesting call to make,” Key said.
“New Zealand has done well actually, in helping migrants to New Zealand.
“I mean the real issue here is not stopping people who want to come live in New Zealand, that can bring skills and capital and make a difference to our country.
“It’s making sure that we build enough houses to accommodate people.”
Migrants added to and stimulated the economy, he said.
“Overall that’s a positive thing. We need to bring people in for a variety of reasons, if you think about the Christchurch rebuild, that’s been very important. “I think overall in terms of some of the skills we might need in other parts of New Zealand or the economy it’s useful.
“Historically we’ve always lost people to other parts of the world, although we are on a record low for people leaving to go to Australia.”