Anyone looking for a job should "head south", Immigration Minister Michael Woodhouse says.
New measures to encourage skilled migrants and businesses to move to the regions were announced last month.
The rules were designed to boost local economies and meant new migrants would get bonus points for heading to the regions, but they have to stay for 12 months rather than three.
Mr Woodhouse told TVNZ's Q+A programme today that while immigration was a complex issue with "moving parts", he did not believe migrant numbers were pushing up interest rates, exchange rates and house prices.
He said the idea there were 60,000 people coming and staying in New Zealand was "simply not true".
"What's creating the volatility...is the temporary migration.
"We have quite a strong mismatch between where the labour need is and where the people are, and one of the thing I would say is anybody that wants to see work should head south. There's plenty of it."
He said there were a number of factors at play in the interest rates and house prices - with the Government introducing measures to curb the situation.
"There's some contest about whether or not those things are occurring," he told Q+A.
Mr Woodhouse also said the "significant" changes proposed in the new Health and Safety Reform Bill were being lost after news broke that worm-farming was classified as "high risk" - ahead of sheep, beef and dairy farming.
He said he had no doubt there would be an exemption regime to remove worm farms once the bill was passed.
"Yes, it does seem a bit silly but...we haven't even started that conversation. So, let's get the bill through.
"I don't want this to distract from the very important message that is, this reform bill is a significant improvement on the status quo.
"This is serious stuff."
Labour leader Andrew Little has called the legislation a national joke.
He told Q+A the Government only had "one chance" to pass the law, and get it right.
"I don't accept his view that we can now go through the law change process, have it ridiculed, if only for some parts of it and then somehow through the consultation process that will follow that will restore public confidence, because it won't."