Labour's Finance Spokesman Grant Robertson says Labour learned lessons from its attempt to highlight Auckland's housing woes by focusing on Chinese surnames.
Robertson made the concession after speaking at Labour's election year Congress in Wellington - a speech in which he defended Labour's policy to cut immigrant numbers, saying it was a matter of policy not race and anyone who tried to make it about race should be "called out."
He told the 400 candidates and delegates at the Congress in Te Papa that immigration put infrastructure and housing under strain and every country in the world had measures to restrict people coming through its borders.
"We need to manage that carefully at the moment while we build our infrastructure back up.
But let me be clear. This is a debate about policy, it is not a debate about immigrants. And anyone who makes it about immigrants, or indeed about their race, must be called out for what they are doing as being wrong and against the values of Labour and of New Zealanders."
Asked afterward how he reconciled that with Labour's own actions, such as using real estate data and Chinese surnames to try to highlight foreign buyers, Robertson said the party learned a lot from the reaction to that.
"I think Phil [Twyford] has been very clear he learned from that, that it didn't come out the way intended. What I stated today was what I believe the Labour values are.
We can't be scared to have a debate about the rules we have for people coming into New Zealand. It's just important we have that debate not about individuals, not about their race but about the policies that underpin it."
He denied he was referred to NZ First leader Winston Peters. "I'm not calling out anyone in particular."
Labour leader Andrew Little has said he plans to cut net migration by 'tens of thousands' from record levels of 72,000 a year by targeting work visas and student visas. He is expected to set out the full policy in the next few weeks.
Robertson said the student visas under scrutiny were those for 'low quality' courses which were effectively simply an easy path to residency.
"We do know that's what's happened, that the courses are not really about their academic merit, they're actually about how people can get on that pathway to residency."
Robertson also gave the Government a fail grade on housing and infrastructure and promised Labour would oversee investment in infrastructure "to make sure the infrastructure of this country is fit for purpose for the 21st Century."
"We cannot have the productivity of our business compromised by cars and vans stuck in traffic in Auckland for hours at a time. We cannot have business opportunities lost in the regions because we have left the rail lines to rot."
National has set out a $11 billion capital spend on infrastructure over the next five years. Asked what number Labour was looking at, Robertson said it would wait to see what was in the Budget later this month before finalising its own policy. He said as well as using the Government's balance sheet to fund it, Labour was looking at infrastructure bonds.
A proposal from MP Raymond Huo to use the funds of migrant investors in infrastructure had some merit and was being considered.
He also said he rejected National's 'social investment' approach, describing it as "double-speak" and a disguised attempt to push an agenda of privatisation.
"It is a cloak for the old National Party agenda. Cutting funding, privatisation and individualism.
We cannot and will not support it."
Robertson took aim at Prime Minister Bill English, the main driver of the social investment approach which sees Government agencies relying on data to target spending at at-risk people to try to prevent them going onto a life of crime or benefits later in life.
Deputy leader Jacinda Ardern is due to speak this afternoon and is expected to set out a policy in the youth health area.
Labour leader Andrew Little will speak tomorrow and has signalled a policy on negative gearing for landlords as part of Labour's wider housing policy.