It was the worst of weeks and best of weeks for the Government.

The after-glow emanating from the state of Government accounts later in the week rather masked more damaging events earlier.

Of itself, addressing a pressing problem should not damage National.

But Michael Woodhouse's immigration announcements to cut back approvals for permanent residence - and cutting the number of parents who get an easy ride to residency and superannuation - is the most recent in National's modus operandi.


It is an MO that threatens its own credibility and certainly boosts the credibility of its opponents.

It follows the same pattern by the Government for many other problems: deny there is a problem; keep on denying it; address the problem; but deny it is a big problem.

It happened with Serco's management of Mt Eden, with the treatment of foreign trust disclosure rules, with "miracle" drugs for Pharmac, with Government-backed housing developments for Auckland, and in its surprise response to child poverty in the 2015 Budget, lifting social welfare benefits to beneficiaries with children up to $25 and increasing in-work tax credits for working families by up to $12.50 a week.

Until now, the Government has refused to regard record net migration in Auckland as anything but "a positive problem."

The Opposition is often criticised for opposing for the sake of it, but the Government can be equally obstinate in defending the indefensible, simply because of opposition to it.

The takeout from this week's moves is that Winston Peters has been right all along.

The Government has enhanced his credibility.

He raised concerns about the Parents category a long time ago and with good cause.

In two of the last five years, the numbers gaining residency in New Zealand under the Parents category from China exceeded the total numbers in the Skilled/Business category from China.

A young couple that qualified for residency here was able to bring out four parents under the "centre of gravity" policy. While that has since been dropped, applications for parents have been well over the 5500 annual cap.

And the thing that worried Woodhouse was not so much the number, but the number of children who sponsored their parents here on the promise of providing for them but who did not meet that promise.

These parents are eligible for full national superannuation after 10 years, a pension system already facing massive pressures with the baby-boomer bubble.

It was 20 years ago this week, in the first MMP election in1996, that Peters increased his caucus from two to 17 and held the balance of power after railing against a surge in immigration.

The number of permanent resident approvals peaked at 55,900 in 1995.

By the time Peters got to power, he did not do much in immigration because English-language tests adopted by National had already led to a significant fall in approvals, and that fell to as low as 27,400 in 1998.

But approvals steadily increased and in the last two years of Peters supporting the Labour Government, approvals had climbed to 47,000 and 46,000.

Approvals have not reached the giddy heights of 1995 but the past year, 2015 - 2016, came closest at 52,052.

What effect Woodhouse's measures will have are not clear.

The changes to target numbers for permanent residence are so small - a reduction from up to 50,000 a year to 47,500 a year, although the moves in themselves may have a chilling effect on applications to levels below the target.

And there are more moves pending that will confirm problem areas highlighted by Opposition parties; Woodhouse signalled further changes this year to student and work visas.

In the past couple of years, only half of the people getting residency have been in the skilled or business category and of those, nearly half are former international students.

New Zealand First's Tracey Martin spelled out the weaknesses of the system in Parliament this week.

Since 2008, more than 730,000 students had got a student visa and even after just a one-year course they have a year to hunt for a job related to their qualification and then usually have two years to work in it during which time they can apply for permanent residency.

In the first MMP election in 1996, Peters increased his caucus from two to 17 and held the balance of power after railing against a surge in immigration.


So the 730,000 can have three years of working rights.

The problem is not the high-skilled students finding work in their fields; it is the low-skilled ones that end up in low-skilled jobs.

Of the 209,506 work visas approved last year (2015 - 16), only 31, 906 were for jobs in the 'essential skills" category.

As Labour has pointed out, 2381 work visas were approved for clerical and administrative workers in the past year when 14,500 unemployed New Zealanders were looking for work in that category.

Likewise visas for 2745 sales workers were approved when 23,000 unemployed Kiwis were looking for work in that area.

Meanwhile the Manufacturers and Exporters Association is sceptical that Woodhouse's decision to lift the bar for skilled migrant to 160 points will have the intended consequence of giving higher priority to skilled migrants.

It was disparaging this week of the Government's record to matching skilled migrants with what the economy needs and called for an in-depth review of the immigration system.

Of course there are many positive aspects to immigration; the economic spin-offs to record net migration are obvious.

It has helped the Government post a $1.8 billion surplus for the last financial year, a result that has only enhanced Bill English's credentials.

But it has contributed to the staggering house-price inflation in Auckland which impacts on every level of housing.

The added population put added strain on Government services.

That forced English to raid the tax-cut kitty penciled in for 2017 to fund extra demands on spending in Budget 2016.

What was originally a $2.5 billion new spending allowance for the 2017 election-year Budget is only $1.5 billion.

Yes, the $1.8b surplus (essentially $1.2b extra, above forecast) for the past year is on top of the spending allowance for 2017 but the Government has not repaid a single cent yet of the $86.9b in debt (necessarily) that piled up through the GFC and earthquakes.

And that is before demands for tax cuts or more money to address social spending, plenty of which is driven by high immigration.

And fortunately for National, it will be English making the wise or foolish decisions.