Labour's rates plan to limit immigration
The fine print in Labour's plan to make mortgages cheaper contains a political bombshell.
Labour wants to stop some immigrants coming into New Zealand because they are pushing up house prices in Auckland.
In the overheated Auckland housing market, Labour already wants to ban foreign buyers. But now it wants to go further and ban some at the border, cutting back immigration numbers.
"I think we've got to look at it," says Labour's finance spokesman David Parker. "House price and inflation is out of control in Auckland."
Buried in the small print of yesterday's announcement to use KiwiSaver to curb inflation, under the innocuous heading 'monetary policy needs friends', was a big call on immigration.
"There may be a case for varying inward migration and/or work permits," it says.
"There are numbers that the immigration department can target, and you could change the target," says Mr Parker.
Labour says foreign buyers are pushing up house prices in Auckland. That in turn pushes up inflation, which the Reserve Bank combats by raising interest rates.
"The research shows a surge in migration like we're seeing could push up house prices around the 7 percent mark," says financial commentator Bernard Hickey.
In the past four years total migration has increased sharply, gaining a total of 22,400 people last year – the highest number from China and India.
"If migration was dialled back to try and help the Reserve Bank, then the ones most affected would be those from China and India because they are the ones coming here the most at the moment," says Mr Hickey.
The Prime Minister says he wants to keep the doors open.
"They add and stimulate the economy, but overall that's a positive thing," says John Key. "We need to bring people in for a variety of reasons. If you think about the Christchurch rebuild, that's been very important."
Immigration is a red-button issue in election year, especially when you mix it with rising house prices. With Chinese and Indian immigrants the most likely affected, critics will call it dog-whistle politics based on race.
But with the mortgage belt and first-home buyers Labour's target, this may well be popular.