National is preparing for immigration to become a major election issue.

Prime Minister John Key said it would be "ill-informed" to blame immigrants for strain on house prices in Auckland.

And Immigration Minister Michael Woodhouse said National had to be confident at next year's election countering "thinly-veiled xenophobic rhetoric" from New Zealand First leader Winston Peters and from Labour.

Permanent residency approvals were higher under Labour than under National and were at the highest when Mr Peters was supporting the Labour Government.


Both were commenting at the National Party conference in Christchurch.

Mr Key said having too many people was a better problem than eight years ago when too many people were leaving the country.

Last week Statistics New Zealand reported an unemployment rate of 5.2 per cent and some employers were starting to see skill shortages.

"When you talk about having the component parts to grow a strong economy, you don't just need good physical infrastructure; you need the people to do that," he said.

"If you break it all down, which bits would you want to stop? Certainly not returning Kiwis or Australians; certainly not people we educate that we make money out of; certainly not holiday-makers who come as part of a working holiday programme."

The skilled category was intensively looked at and it was changed.

The most recent migration statistics collated from airport arrival and departure cards show a net gain in the year to May of 68,432.

Mr Woodhouse told delegates immigration would be an election "hot-button issue".

"Our friend Winston has already started that conversation, ably supported by a Labour Party that despite their claimed liberal leanings are now talking about things like Chinese-sounding surnames."

He said delegates had to counter the "they" conversations: "The 'they conversations' are 'they are taking our jobs, they are buying our houses, they are suppressing our wages'."

It was an overly simplistic idea that migration was at too high a level and that "we have got to turn the tap down or off".

Appearing on TVNZ's Q&A yesterday, Mr Peters said the annual number of immigrants should be between 7000 and 15000 maximum.

"You've got a housing crisis; an infrastructure crisis; you've got a health crisis, education.

"Everywhere you look, you've got a crisis. Police numbers are capped, and there's Mr Key saying, 'We want more'."