It said creating a government policy statement would clarify how immigration would be managed, how it is connected to other government objectives, and what investments would be made.
Productivity Commissioner Ganesh Nana said a policy statement would require a clear pathway to be set on immigration.
"A [policy statement] would have improved the transparency around the government's recent immigration rebalance announcement by including how policy changes would affect the expected number and composition of migrants and the planning range for residence visas.
"It would have explained how its objectives in immigration related to its other objectives for education and training, and investments in infrastructure overall," he said.
Nana also said much of the government's immigration rebalance announcement so far was focused on the temporary visa system.
"Immigration policy should be clearer about the likelihood prospective migrants can achieve residency under the points system (the Skilled Migrant Category). The points system needs to be more effectively linked to the residency planning range."
Also included was a recommendation to discontinue issuing new permanent resident visas for new residents, and to require new residents to renew their resident visas every six years.
Eligibility for renewal should include residence time and other measures of commitment, such as investment and family living in New Zealand, the report said.
"The recommendation we're making is that the residency visas are limited, so that we're encouraging people to stay for a lengthier period of time to renew their residencies or indeed to take out citizenship ... encourage residents to feel part of the country and actually commit to the country for the long term," Nana said.
Further recommendations included speeding up processing and increasing the certainty of visa status for highly productive and highly paid workers, and making it easier for top talent to enter the country.
The Commission also recommended the government should introduce the concept of the country's capacity to absorb immigrants when setting objectives for immigration policy.
"Improving the country's languishing productivity is a long game. This is often at odds with how successive governments have run the immigration system: reactive to short-term pressures and sometimes conflicting priorities," Nana said.
The final report has been given to the Finance Minister and Immigration Minister for consideration.
