New Zealand's 118,000 net migration gain in a year is unsustainable, and infrastructure needs to be better managed to support growth, says Prime Minister Christopher Luxon.
His comments came as Australia prepared to unveil its long-awaited migration strategy to help address pressures on housing and infrastructure.
Australia's net migration gain has been over 500,000 in the last year.
In New Zealand, net migration gain is at almost 120,000 - a rate higher per capita than that of Australia.
Luxon told Morning Report New Zealand's immigration spike was in part to fill job shortages after two years of closed borders due to the Covid-19 pandemic.
"We're inheriting a system that's been a complete hash," he said.
New Zealand's immigration system had been closed "at a time when employers were looking for workers" during the pandemic, "and then Labour opened the floodgates just as the economy was starting to slow".
However such high net migration rates did not feel sustainable for New Zealand, Luxon said, and any immigration should be linked to the filling of skills shortages.
The government would be working with Immigration New Zealand to make sure there were audits and checks in place to manage migrant numbers, he said.
The Reserve Bank's Monetary Policy Committee warned when it held the Official Cash Rate (OCR) at 5.5 percent last month that the surge in migration posed threats to inflation by stoking demand in the economy.
And a recent Organisation for Economic Co-operation and Development (OECD) economic outlook pointed to migration driving demand for houses and other services in New Zealand's economy.
Luxon acknowledged there had been a "massive challenge" around catching up on migration following the two-year border closure.
"That was necessary in order to fulfil those job shortages but then it was really complete and utter open floodgates and that's what we've got to go back through and actually make sure that any immigration is linked very strongly to the economic agenda of New Zealand."
Making sure the infrastructure needed to support population growth was well managed was also part of the equation, Luxon said.
He said he understood why Australia was "pulling back" on its migrant numbers and noted that 118,000 net migration was "very, very high for New Zealand - it's the highest it's been".
Asked whether the government had a target in mind for annual net migrant numbers, Luxon said it was "very hard for any government to lay out ... a hard-and-fast number, what we've got to do is make sure that any migration is linked very strongly to those worker shortages that we have".
"We can't always control Kiwis returning or Aussies, but what we've gotta do is make sure that we are getting the settings right. It's gone from being way too restrictive, to being way too loose, and we've gotta find that balance."
How the numbers stack up
Stats NZ figures show the country's population grew almost 3 percent in the year to the end of September, with net migration - the number of migrants arriving minus those departing - hitting 118,800.
There are now 5.27 million people living in Aotearoa - an annual population growth of 138,000 people.
However natural increase - the number of births minus deaths - made up just 19,300 of those numbers.
Massey University demographer Professor Emeritus Paul Spoonley told Nine to Noon last week that New Zealand could end the year with the highest net population gain in the OECD.
"We've never seen these sort of level of arrivals and net migration gain ever in our history and it is contributing significantly to our population growth."
He said migrants were not coming to New Zealand for economic returns "but we are seen as a very desirable destination".
Spoonley said a Productivity Commission report last year had highlighted the need for more services and infrastructure to keep pace with migration, but had had little impact on policy.
"My calculation is that we will grow by around 2.5 percent this year, which is really high ... the problem is, how do we provide the services and infrastructure when our population continues to grow?"
He said Auckland would be the most impacted by the influx of arrivals, with many migrants choosing to settle in New Zealand's largest city.
"Auckland, yet again, faces this very rapid population growth without actually having the infrastructure there to provide for the existing population, nevermind the new super-sized population."
However the statistics showed the number of New Zealand citizens leaving the country had also rebounded, Spoonley said, which was a return to a "pre-Covid pattern" that had been in place for about two decades.
"We are seeing a net loss of 44,000 New Zealanders, that is a major concern."