Prime Minister Bill English is citing the large number of young Kiwis failing workplace drug tests as a reason not to further limit unskilled migrant numbers.
English defended the latest increase in net migration today and said he was not looking at curbing demand, despite 140,000 New Zealanders being out of work.
Speaking at his weekly press conference, English said the Government was still getting "robust" complaints from businesses that they could not fill vacancies, especially the hospitality and horticulture industries.
Asked why jobless New Zealanders could not fill these roles, English said: "One of the hurdles these days is just passing a drugs test.
"Under workplace safety, you can't have people on your premises that are under the influence of drugs. And a lot of our younger people can't pass that test."
English said the Government did not keep records of failed or refused drug tests, but businesses raised the issues with him "two or three times a week".
"It's a very common discussion. It's not exceptional at all these days. I've heard it in most industries."
He made the comments after new data out today showed net migration in New Zealand hit a new high of 71,300 people in the last year.
That is despite English's prediction that net migration had peaked and was unlikely to become a political football in election year.
Opposition parties said today the high migrant numbers were hurting New Zealanders.
New Zealand First leader Winston Peters said today over half of migrants were settling in Auckland, where there was an acute housing shortage.
"They'll need the infrastructure for a city the size of Rotorua to support them - but it's not being built."
Peters said the Government had made no preparation for housing or creating jobs for the 1370 people arriving each week.
Labour's immigration spokesman Iain Lees-Galloway said the latest statistics were further proof the Government had "absolutely no plan for immigration and its impact on New Zealanders."
"A huge proportion of our new migrants, 56,231, are moving straight to Auckland, which is an 8.5 per cent lift from last year.
"A Government with a plan would know how to better distribute new migrants around our regions, take pressure off of Auckland housing and infrastructure, and provide workers to areas that need them.
"Migration has been one of the central drivers of rising house prices, which are now continuing throughout New Zealand as the Auckland housing crisis ripples out to the regions."
English said the single biggest driver of net migration was the number of returning New Zealanders, which was at its highest level in 25 years.
He reiterated that high migrant numbers were "good problems to have" because they indicated a healthy economy.
"This is what it feels like to be in a growing economy with some confidence and some direction.
"The Government is focused on supporting that growth, not trying to shut it off."