New Zealand's new permanent residents are now less skilled than five years ago, due to some international students exploiting the student visa scheme, official documents say.

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That is the assessment of Ministry of Business, Innovation and Employment officials, advising ministers on the impact of changes the Labour-led government wants to make to remove 'back-door' residence for students wanting to study, and then settle, in New Zealand.

Students can work in New Zealand after they finish studying and this has allowed some people who would not otherwise have qualified to get permanent residence, Official Information Act documents say.

Officials said these regulations have been a factor in "the gradual decline in the average skill level of new permanent migrants" over the last five years.

Students from countries like India are much more likely to become residents, the documents say, suggesting they may be "more driven by migration prospects than quality education".

The papers also warn there is a risk of students working full or part-time "displacing domestic labour and suppressing wages", but there was not enough data to gauge the full extent.

In 2013, the National government relaxed English language proficiency standards, which resulted in the number of students from the Indian market going from about 8000 in that year, to just over 19,000 two years later.

It tightened the standards up again in subsequent years, and those numbers dropped back to about 16,000 last year.

But the government now wants to limit the number of international students who can work to those studying at degree, or equivalent, level.

Officials say 12,000 students who were able to get an 'open post-study visa' last year, leading to residence, would not have been able to do so if the proposed new rules had been in place.

The documents also outline risks to cracking down on student visas including less money for the international education sectors, and an uncertain future for some tertiary institutions, creating short term labour shortages and damaging international relations.

Immigration Minister Ian Lees-Galloway said it was a concern to him in opposition, and continues to be one for him as minister.

"That there are some people who by virtue of studying in New Zealand, get points towards residency that helps them achieve residency when they wouldn't otherwise based on their skill level."

National's immigration spokesperson Simon Bridges has defended his government's handling of the visa scheme.

"This is a sector that's provided billions of dollars for New Zealand, it's a quality sector and I think the new government needs to be very careful before they started playing around with that and putting $3 or $4 billion at jeopardy".