WELLINGTON • New Zealand Prime Minister-elect Jacinda Ardern has said her Labour Party will not cut immigration by as much as that demanded by coalition partner and kingmaker Winston Peters, just days after he selected her to rule.
Mr Peters, leader of the New Zealand First party, whose populist appeal has seen him compared with United States President Donald Trump, campaigned in last month's election to slash immigration to just 10,000 a year from about 73,000. Labour also wants a reduction but only by as much as 30,000.
"Labour's policy remains absolutely unchanged as a result of these negotiations" with Mr Peters, Ms Ardern said in an interview with The Nation broadcast yesterday.
Along with central bank reform and increased social spending, the looming cut to immigration is one of the policies by the incoming coalition government that has worried investors, who are already nervous about the slowing economy.
Ms Ardern, 37, will become the world's youngest female leader less than three months after taking the reins of Labour, drawing comparisons with the generational shift seen in Austria, Ireland, Canada and France.
Mr Peters backed Ms Ardern to rule after 12 days of negotiations last Thursday, even though her Labour Party finished second in the Sept 23 election, when the ruling National Party failed to secure a majority.
NZ's current annual immigration.
New Zealand First leader Winston Peters' yearly immigration target.
Labour Party's target.
Labour will now lead a three-pronged coalition comprising New Zealand First and the Greens.
Labour and New Zealand First both campaigned on reducing immigration, which they said had increased too rapidly, putting pressure on housing, infrastructure and public services.
"There is undoubtedly strain based on the fact that we have had a government whose entire growth agenda has been based on population growth," Ms Ardern said in the interview, adding that some immigration was still needed to fill skills shortages.
Migration agents say the incoming coalition government's pledges to cut immigration could lead temporary workers and foreign students - previously drawn to New Zealand on the promise of gaining residency - to start leaving en masse.
"We are told that (foreign) students are working as many hours as possible to make as much quick money as possible on the understanding that there is no more path to residency, and they will need to return home," said Mr Connor Brady, immigration adviser and manager director at agency New Life Global.
New Zealand had almost 122,000 international students last year, up 40 per cent from three years earlier, led by those from China and India.
Meanwhile, Ms Ardern said she expected to see a "cooling off" in the housing market as her new government sought to encourage construction of cheaper, smaller homes.
Outgoing Prime Minister Bill English was criticised by some voters for failing to respond to a surge in prices that made houses unaffordable for many New Zealanders. Home ownership has fallen to the lowest since 1951. "We can make sure we can bring on stream affordable housing without... dropping significantly the value out of peoples' existing homes," said Ms Ardern.