INZ's $90 Million Deficit: How a Failed Technology Project Could Push Up New Zealand Visa Costs

News · 2026-09-04 · 5 min read

A government IT project that was never delivered is about to land on the desks of New Zealand employers who sponsor overseas staff. This year, Immigration New Zealand (INZ) is carrying a $90 million gap in its visa accounts. A fresh fee review is scheduled to happen before 2026 ends, roughly two years since the last one was completed. Businesses relying on skilled migrants, and the migrants they hire, should treat this as a preview of what they will soon be invoiced for.

Two causes behind the gap

INZ's deficit can be traced to a pair of programmes:

Our Future Services: an automation overhaul worth $336 million, now in its early years, whose running costs continue.
The Biometric Capability Update (BCU): designed to upgrade INZ's handling of biometric data. Work on it lasted seven years, between 2018 and late 2025, before it was abandoned with nothing usable to show.

The BCU bill keeps growing

The official write-off for the BCU in the 2026 Budget was $31.2 million. It was soon out of date. MBIE chief executive Nic Blakeley told officials in July 2026 about another $6 million of costs linked to the project that nobody had disclosed earlier, adding that he was unable to guarantee there was nothing more. Reporting by the NZ Herald in early September 2026 estimated known losses at nearly $40 million, while MBIE remained unable to confirm the tally was final.

Liabilities still unresolved

Further exposure is possible. As the BCU contractor, NEC may be owed as much as $12 million by INZ. NEC also claims losses of no less than $4 million, and there are potential penalties of up to $750,000 a month linked to a 2025 delivery deadline that was missed. Ministers have offered few specifics while the Michael Heron KC inquiry continues.

What the reviews and investigations uncovered

Greg James led an independent review that set out plainly what went wrong. It found that:

the project was launched in 2018 with inadequate analysis behind it;
due diligence was missed when it was rescoped in 2020;
governance arrived too late to be effective;
issues were allowed to grow outside the usual reporting channels.

Separately, an investigation by 1News questioned whether MBIE had kept costs under the $35 million level at which Cabinet approval would have been needed.

Upbeat reports, a very different reality

Internal communications painted a far rosier picture than the facts supported. On March 19, 2024, a project update labelled the programme “sound and robust” and said it was on track. Just nine days afterwards, independent quality assurance concluded the system was unlikely ever to be delivered. Appearing before the Privileges Committee in July 2026, Blakeley finally admitted: “We got it wrong.” Finance Minister Chris Bishop was no gentler, calling the project “a disaster.”

Early trouble for the successor system

Our Future Services is an eight-year programme intended as the replacement, yet only a year and a half in, weaknesses are visible. Stanford reviewed it and concluded that the savings in the original business case were overstated. The case relied on eliminating 118 full-time roles and on lower overhead across IT, property and corporate services, even though such overhead mostly stays the same when staff numbers drop.

Productivity has not risen by the promised 30% either. Student visa processing sits just 7–20% higher than baseline, and Treasury now rates the programme as a whole “high risk.”

Why sponsors and migrants feel the impact

For employers and migrants, this is not just a public accounts story; it changes what hiring costs. Since the 2024 overhaul of fees and levies, the burden of funding INZ has fallen almost entirely on its users. According to Turner Hopkins Immigration's August 2026 analysis, the 2024/25 income split was approximately:

fees: 50%;
levies: 40%;
general taxation: just 9%.

That works out at about 91 cents in each dollar of INZ spending being paid directly by migrants and their sponsoring employers. Turner Hopkins drew a clear conclusion: people who fund nearly all of the system have every reason to expect responsible management of it.

The 2024 increases in figures

Users already felt that shift in 2024. Fees for skilled residence visas went up from $4,290 to $6,450, and the student visa fee doubled, reaching $750. A Cabinet paper prepared by INZ that year projected ICT spending would grow from $13.3 million in 2024/25 to $58.2 million by 2027/28. That fourfold rise is largely due to old legacy systems that the BCU was supposed to replace but never did.

Who ends up covering the cost

Making users pay was a conscious policy choice, and the 2024 rises were explained as removing a taxpayer subsidy from immigration. That stance can be defended by itself. Today's renewed deficit, though, did not come from policy. Its sources are a project that failed, a business case built on optimistic assumptions and unresolved obligations to a vendor.

MBIE has conceded that restoring a surplus in the visa account will take spending cuts as well as “revenue recovery measures.” In everyday language, expect higher fees again, paid by employers and migrants who had no role in why the BCU collapsed.

Practical advice for Pakistani applicants

Anyone weighing New Zealand jobs for Pakistani workers should allow for possible fee rises in their budget and plans, and verify the latest charges directly with INZ when ready to lodge. Keep an English CV and your supporting papers organised, and complete Pakistan's emigration formalities with the Bureau of Emigration & Overseas Employment ahead of departure.

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