The Treasury warned that record levels of immigration could push New Zealanders out of low-skilled jobs, depress wages and increase housing pressures.

Its views were contained in advice it gave to ministers.

In December, Treasury advised Finance Minister Bill English to discuss "trade-offs" in immigration policy changes with ministerial colleagues.

Migrants were increasingly working in low-wage industries where there is no strong evidence of a skills shortage, Treasury noted in a briefing, released under the Official Information Act.

Gabriel Makhlouf, Treasury secretary. Photo / Doug Sherring
Gabriel Makhlouf, Treasury secretary. Photo / Doug Sherring

"There is a concern that recently there has been a relative decline in the skill level of our labour migration. The increasing flows of younger and lower-skilled migrants may be contributing to a lack of employment opportunities for local workers with whom they compete."

The current approach "may have encouraged reliance over time on lower-skilled labour in some parts of the economy", and that could discourage increased wages or training.

Treasury stressed the size of these possible effects was not large when viewed over the entire economy, "but at the margin, we believe that there are benefits to making changes to immigration policy".

The documents, published on Treasury's website, also reveal officials' caution about how its analysis could fuel debate on the topic.

"The political economy of migration policy can be fraught, but NZ actually has had a relatively calm public debate. But there is always latent risk of this turning on a dime."

Immigration Minister Michael Woodhouse said measures were in place to ensure Kiwis were "front of the queue" for jobs, but locals simply didn't want some. Officials also had advised there was no evidence that New Zealanders were missing out on jobs.

NZ First leader Winston Peters did not agree that potential downsides were at the margins of the economy, or that there wasn't evidence they were occurring.

"It has been a plain fact for a great number of years now, but much exacerbated by greater numbers in recent times, and the last 21 months in particular," Mr Peters said.

Last week's Budget forecasts show net long term migration peaking at a net 70,700 inflow in the year to June 2016, dropping back to the long term average of 12,000 by 2019.

Mr Woodhouse said it was important to note that migration was not residency, and included working holidaymakers, international students, and temporary workers.