It was good news for migrants who were already employed in the South Island, he said.
But the issue of finding skilled workers in the dairy industry was still a problem, as there were not many staff moving around jobs in the industry and not enough people to fill positions, he said.
Clutha-Southland MP Todd Barclay said Southland and Otago had some of the lowest unemployment rates in the country.
"This means that our employers are left with roles to be filled, particularly in the agriculture, tourism and hospitality industries," Mr Barclay said.
"We simply don't have the capacity to fill all of the jobs with local labour and we have a number of migrant workers who have been filling these skill shortages and living, working and contributing to our communities in positive ways for many years."
Mr Woodhouse's announcement also meant there was some concern about attracting more migrants to the industry in New Zealand, Mr McKenzie said.
In some instances there would not be the opportunity for migrants to become residents, so migrants would most likely look at their options, he said.
Changes to immigration included the introduction of a maximum duration of three years for lower-skilled and lower-paid essential skills visa holders.
Farm owners put a lot of capital investment into training and upskilling their staff, and they became a part of the community, so if they were not meeting the new thresholds they would be lost to the industry, Mr McKenzie said.
Two remuneration thresholds were also being put in place, the first at the median income of $49,000 per year and the second at one and a-half times the median income - about $73,000 per year.
Herd managers would be able to meet the first threshold, but a deterrent could be how partners and children got visas, as they could only get a visa if they, too, met all the new threshold requirements, he said.
"That also could possibly act as a deterrent. If they don't see any certainty they are likely to look elsewhere."
However, immigration was only a part of the puzzle, Mr McKenzie said.
"We need to make the industry more attractive."
Pathway to Residency
To be eligible for the pathway to residency, temporary visa holders must:
* Currently be on an essential skills visa for a job in the South Island and have been in the South Island for five or more years.
* Be 55 years old or younger.
* Hold current employment that is full-time and meets market rates and their employers would need to have no significant adverse record with the Labour Inspectorate or Immigration New Zealand.
* Meet standard residence health and character requirements.
Eligible migrants will be granted an initial work to residence temporary visa, which will make them eligible for residency in two more years, provided they stay in the same industry and region.
The requirement to remain in the same region for a further two years after being granted residency ensures that commitment to the region continues.
The changes in brief
* The introduction of remuneration bands to determine the skill level of an essential skills visa holder, which would align with the remuneration thresholds being introduced for skilled migrant category applicants.
* The introduction of a maximum duration of three years for lower-skilled and lower-paid essential skills visa holders, after which a minimum stand-down period will apply before they are eligible for another lower-skilled temporary work visa.
* Aligning the ability of essential skills visa holders to bring their children and partners to New Zealand with the new skill levels.
* Exploring which occupations have a seasonal nature and ensuring that the length of the visa aligns with peak labour demand.
