The mass exodus of New Zealanders across the Tasman could resume within a year, Finance Minister Bill English says.
The net outflow to Australia peaked at 40,000 people a year in 2012 but has slowed to 9700 a year and a seasonally adjusted net loss of only 200 a month in April and May.
English told the Trans-Tasman Business Circle in Auckland today that the change had come about because of Australia's weak labour market.
He said Australia's economy was still growing at a rate of about 3 per cent, but the slowdown in the mining sector had triggered layoffs that had caused more Kiwis to return home and more to stay in New Zealand.
"The 24-year-old in Invercargill is not leaving for Queensland because their cousin can't get a job there," English said.
"The top-line numbers aren't too bad, but Kiwis are sceptical about job creation."
The situation could be temporary if the Australian economy maintained its solid pace and managed to readjust, he said.
"I think in 12 months' time it will start happening again; we will start to see that net outflow."
English said New Zealand's growth rate of about 3.5 per cent was as fast as it could go without overheating, and the Government was looking at ways of removing growth constraints.
"The big question is the extent to which we can have more sustained growth after dairy prices come off, Auckland does its construction catchup and Christchurch gets rebuilt," he said.
English said the Government was looking to improve growth capacity in several ways, such as investing in skills and infrastructure and getting councils to do proper economic assessments of their planning policies.
"There isn't one big thing that's going to alter investor confidence; it's 300 things across a range of industries and aspects of government policy."
He said net Crown debt had increased from $10 billion since National took office in 2008 to $65b today, and the "thin" surpluses forecast for the next few years would make repaying that debt a slow process.
"It's like we have a bank overdraft of $65,000 and at the end of this year we will have $372 to start paying it off," he said.
"The bank manager would laugh at that, but we've got to start somewhere.
"It's another reason we can't go on a spendup. We've got to get on with clearing the overdraft so that in the next recession ... we can go and ask for an overdraft."