Prime Minister-elect Jacinda Ardern rejects scope of New Zealand kingmaker's immigration cuts

New Zealand's incoming leader Jacinda Ardern will become the world's youngest female leader less than three months after taking the reins of Labour.
New Zealand's incoming leader Jacinda Ardern will become the world's youngest female leader less than three months after taking the reins of Labour.PHOTO: AFP

WELLINGTON (BLOOMBERG) - New Zealand's incoming leader Jacinda Ardern 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.

New Zealand First leader Peters, whose populist appeal has seen him compared to Donald Trump, campaigned in last month's election campaign to slash immigration to just 10,000 a year from about 73,000. Labour also wants a cut but only by as much as 30,000.

"Labour's policy remains absolutely unchanged as a result of these negotiations" with Peters, Ardern said in an interview with The Nation broadcast on Saturday (Oct 21).

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.

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.

Peters backed Ardern to rule on Thursday after 12 days of negotiations, even though her Labour Party finished second in the Sept 23 election, when the ruling National Party failed to secure a majority.

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," Ardern said in the interview, adding that some immigration was still needed to fill skills shortages.

Ardern also 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 house prices that made them 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," Ardern said.