There are claims New Zealand's southern tourism capital is exploiting migrant workers after a recent probe by the labour inspectorate in Queenstown found half of the businesses audited had broken the law.
Unions are worried it will get worse as the threshold for hiring migrant workers in the town has been lowered.
"The Ministry takes the exploitation of workers very seriously," Steve Watson of the Labour Inspectorate said. "We were very disappointed with that result."
Thirty-five audits were carried out in Queenstown at the end of last year, targeting businesses that target migrants, with 18 of them found to have broken employment laws.
Workers were missing out on holidays, had no employment agreements and were being paid less than the minimum wage.
Those businesses are now complying with the law.
"These employers are not even paying the minimum wage and they're wondering why they can't get Kiwi workers to fill the jobs," Helen Kelly of the Council of Trade Unions said.
Last month the Government opened Queenstown's borders - until June employers can hire migrants without having to prove they've tried and failed to recruit locals.
"It's quite wonderful really, we've got the challenges of success," Associate Tourism Minister Paula Bennett said.
The unions claim it's a deliberate strategy by the Government to keep wages low, and that exploitation will only get worse.
"Oh no, I don't think so," Mr Woodhouse said. "I don't think you could draw a parallel between one and the other."
He wouldn't rule out extending the open borders policy.
"The Government should put to the business community of Queenstown (that if) you get 90% compliance with a basic minimum code you, offer a decent market rate and prove to us that you cant fill these vacancies with Kiwi workers and then we'll come and talk to you about migration," Ms Kelly said.
Businesses caught breaking the law could face a $20,000 fine.