Sly dig at migrants - including Aussies - in Budget

Social Development Minister Anne Tolley. Photo / Mark Mitchell

Access to welfare will be tightened for migrants, including Australians, under a rule change which was quietly slipped into the Budget.

All migrants will have to be based in New Zealand for three years, rather than two years, before they can get access to the main unemployment benefit.

The measure was included in yesterday's Budget but was not accompanied by any public announcement. Set to come into force in July next year, it will affect 2100 migrants a year - in particular Pacific Islanders.

Social Development Minister Anne Tolley said through a spokeswoman that it would apply to all migrants. There would be no exemptions for Australians, despite the two countries' special relationship.

While the move is not targeted at Australians, it has been introduced just weeks after New Zealand expressed frustration with the Australian Government's gradual removal of rights and entitlements for expatriate New Zealanders.

Australian expatriates will still get more favourable treatment than their New Zealand counterparts after the welfare changes come into force. Most New Zealanders who moved to Australia after 2001 cannot get most social security benefits, no matter how long they have lived there.

Immigration data shows that around 5 per cent of recent migrants in New Zealand claimed welfare, and that migrants from Pacific Islands and South Asian countries were most likely to go on a benefit.

It is estimated that changing the waiting time for welfare in New Zealand will save $25 million over four years.

The rule change comes as migration levels continue to defy forecasts.

The Treasury had predicted that annual net migration had reached its highest point at around 70,000 in September. But Treasury estimates released alongside the Budget yesterday said migration numbers had "continued to outpace expectations" and were now expected to peak in the middle of this year at nearly 72,500.

The trend was also expected to decline more gradually, rather than falling off sharply. It would add 212,000 people to the New Zealand population by mid-2021, 67,000 more than was projected in December.

Combined with low interest rates, the high migration numbers were likely to add to "pent up demand" for housing, the Treasury said.

Restrictions which had led to a slowdown in house price increases, such as limits on mortgage lending, would only have a temporary effect on rising house prices.

The high migration numbers were one of the factors behind forecasts of relatively strong economic growth over the next four years, along with other drivers like low interest rates, house-building and tourism.

Finance Minister Steven Joyce said cumulative GDP increases were now $24 billion higher over the next five years than predicted just six months ago.

Shadow Finance Minister Grant Robertson, however, said other economic indicators were not so rosy.

"You still have unemployment continuing to stay extremely high. You still have inflation outstripping wage rises.

"There is no plan in this Budget to create jobs that pay better and reduce unemployment."