Providing migrants with an added incentive to settle in regional New Zealand, rather than Auckland, involves a degree of intervention that would not normally be contemplated by a National Government. But two factors have persuaded it to go there on this occasion. One, as much as the Prime Minister is keen to disown the connection, is the spiralling cost of housing in Auckland. The other is the Government's embarrassing defeat in the Northland byelection. Together, they called forth a welcome pragmatism.

In his speech to the National Party's annual conference in Auckland, Mr Key said the changes would help spread the benefits of migration across the country, particularly in those regions which required workers, skills and investment. Under the changes skilled migrants applying for residency would boost their bonus points - which are used to calculate whether they be approved or not - from 10 to 30 points if they had a job offer outside Auckland. Credit: NZN Video

The new policy, announced by John Key at his party's annual conference, will see bonus points for residency applications raised from 10 to 30 points, out of a required 100, for skilled migrants who settle outside Auckland. For entrepreneurs, the comparable lift is from 20 to 40 points out of 120. Those who settle in the regions will have to stay for a year, up from the current three months. The Government hopes this policy will lead to an influx of fresh ideas and fresh businesses.

The need for it is starkly illustrated by the fact that half of the 10,000 skilled migrants who move to New Zealand each year settle in Auckland. The city's infrastructure and housing market are showing the impact, while the economies of many regions are struggling, a situation not helped by shortages of skilled workers and ageing populations. So evident is the need that the Government may have been tempted to extend the requirement to live in the regions to four years, as is the case in Australia. Last year, Winston Peters, the New Zealand First leader, went even further. To take the pressure off Auckland, he suggested new migrants should have to spend at least five years outside the city.

The Government is right not to be so dogmatic. In the first instance, this country is competing with others to attract skilled migrants and entrepreneurs. Australia, even if its economy has stumbled, still offers superior wages. New Zealand must therefore offer other conditions that give it an advantage.

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In addition, raising the regional requirement to, say, four years would have conveyed an unfortunate message. It would have suggested this country is no longer quite so welcoming. Or so stable in its appreciation of the ongoing value of immigrants. The peril of making radical policy switches has been exposed in the recent past, notably when the Labour Government imposed strict conditions on investor migrants in 2005. Once immigration from that source was reduced to a trickle, if only for a couple of years, it proved very difficult to return to the desired flow.

It will be up to the regions to be as welcoming as possible to the migrants who opt to settle there. They will be the beneficiaries of the skills and new businesses, and it is up to them to persuade the newcomers that they offer enough to compensate them long term for not being part of a large immigrant community. Otherwise, their one-year stint in rural New Zealand will become simply a way of securing a backdoor entry to Auckland. And there will be no lessening of the demand that is driving up house prices in the city.