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Immigration Minister Iain Lees-Galloway blames pay rates, not visa issues, for Queenstown's bus driver shortage affecting the $2 Orbus service's ability to expand.

Otago Regional Council public transport team leader Julian Phillips confirmed its councillors had approved adding the Lake Hayes Estate direct bus service to Queenstown, and hoped to have it in place before the end of this year.

However, a "significant challenge" was recruiting drivers to operate all of the routes in the network, for which Ritchies had the contract.

Immigration rules had been blamed for that, but Mr Lees-Galloway said a recent change to the temporary work visa policy meant pay rates were now being used to assess if people would be affected by a 12-month stand-down, required after three 12-month visas.

"The issue for bus drivers in Queenstown isn't the visa itself, in my view, it's the pay rate.

"Tourism is big business in Queenstown and bus companies benefit from that."

All employers had to do to retain skilled, qualified and trained staff on temporary work visas was pay them above the median wage, $25 an hour, he said.

That would ensure businesses did not use immigration as a "cheap labour source".

"Immigration should be being used to fill skills shortages, and we are determined that people are paid decent wages.

"At the same time, we encourage businesses to train up both New Zealanders and migrants to have the skills to earn more than a median wage."

However, Ritchies director Andrew Ritchie did not believe pay rates were the problem and blamed the Government for the driver shortage because "they think they know best".

"They don't and we've got a big problem looming."

He said immigration regulations were punishing migrant workers in Queenstown.

"I think it's just unfair on the people that have come in from overseas and are prepared to do the work.

"I actually think Queenstown should be given a special status [and] exemption from a lot of the new rules coming.

"It would be a simple thing to do, really."

Queenstown Chamber of Commerce chief executive Anna Mickell said addressing the issues concerning bus drivers was "the single most important thing that Queenstown's got to sort out".

She believed the contract between the regional council and Ritchies would have to be reviewed "if we want to have bus drivers and we're serious about moving to public transport".

"The councils are going to have to look at what they're paying for these essential services, if they want people to move out of cars and into buses.

"They're going to have to fund workforce development and pay these drivers [better]."

Another issue was a catch-22 where overseas workers who wanted a driver's visa needed a P-endorsement on their driver's licence first, but could not get the P-endorsement until they had a visa, she said.

Transport Minister Phil Twyford said the Government had set up a group, including representatives from bus companies, councils and unions, to look at the driver shortage and tackle long-term issues in the industry.

The review is scheduled to finish midyear next year.