Arguably the most effective natural bait for bonefish in the Southland bays is ghost shrimp. These pale creatures live in burrows in the mud of quiet, shallow bays and estuaries. They can grow to two or three inches in length, with male specimens having claws that can measure over half their body length. Some coastal bait shops have ghost shrimp available for sale, though most advise calling in advance, as availability is often uncertain.
An alternative is to gather your own shrimp from back-bay tidal flats, most commonly during minus tides. Small holes in the mud will reveal a bed of shrimp, but in order to remove them from burrows that may be up to 20 inches deep you can (1) stomp mud over a burrow entrance, sealing it off and forcing the shrimp to swim to the surface; or (2) where the tide is just high enough to fill the burrow with water, use a plastic "slurp gun" (you can buy these or make one from PVC pipe) to suck the shrimp out of their homes.
Owner's Mutu Light circle hook in a No. 4 size is ideal for rigging ghost shrimp. The fine wire will penetrate the soft, segmented tail without breaking the bait apart, and circle hooks tend to lodge in the corner of the fish's mouth after it takes the bait, making for an easy release. That's important, because bonefish are an unattractive food fish (they don't call them bonefish for nothing), so you will want to release them.