New Zealand's Visa Deficit Explained: How a Scrapped IT Project Lands on Migrants and Employers

News · 2026-09-04 · 5 min read

Facts first. Immigration New Zealand (INZ) has a $90 million hole in its visa accounts this year, and a new fee review is due before the end of 2026, coming barely two years after the last one. If you are a skilled worker heading to New Zealand, or a business bringing in staff from overseas, you need to understand where that gap came from. The reason is simple: the people who use the system are the people who fund it.

Follow the Money: Who Pays for INZ Today

Since the 2024 shake-up of fees and levies, INZ has relied almost completely on its users. According to Turner Hopkins Immigration's August 2026 analysis, the 2024/25 revenue split was roughly 50% fees, 40% levies and a mere 9% from general taxation. That works out to about 91 cents in every dollar INZ spends coming directly from migrants and their sponsoring employers. The firm's point was clear: if users are carrying nearly the whole cost, they are entitled to expect responsible management.

Applicants have already paid for this shift. In 2024, fees for the skilled residence visa rose from $4,290 to $6,450, while student visa fees doubled to $750. That same year, an INZ Cabinet paper forecast ICT spending going from $13.3 million in 2024/25 to $58.2 million by 2027/28, a fourfold jump. Much of that is down to ageing legacy systems that the BCU was supposed to replace and did not.

The Two Sources of the Shortfall

First, there is Our Future Services, the $336 million automation programme, which is still in its early years and costs money to run. Second, there is the fallout from the Biometric Capability Update (BCU). It was meant to modernise how INZ handles biometric data. It ran from 2018 to late 2025, a full seven years, and was scrapped with nothing usable to show for it.

How Much the BCU Has Really Cost So Far

The 2026 Budget recorded a $31.2 million write-off for the BCU. That was not the final figure. In July 2026, MBIE chief executive Nic Blakeley revealed $6 million more in project costs that had never been made public, and he admitted he could not promise that was all of it. By early September 2026, the NZ Herald was reporting total known losses of nearly $40 million, and MBIE still could not confirm the count was complete.

The exposure is not over yet:

INZ could owe the BCU contractor, NEC, as much as $12 million.
NEC is claiming its own losses of at least $4 million.
Penalty charges of up to $750,000 per month are possible over a missed 2025 delivery deadline.

With the Michael Heron KC inquiry now in progress, ministers are saying very little.

Seven Years, Zero Results: The Review Findings

An independent review led by Greg James did not soften anything. It found the project:

kicked off in 2018 without proper analysis;
skipped due diligence when it was rescoped in 2020;
put governance in place too late for it to matter;
let problems escalate outside normal reporting lines.

A 1News investigation went a step further and asked whether MBIE kept costs below the $35 million threshold that would have forced the project in front of Cabinet.

What was said internally did not match reality. A project update dated March 19, 2024 called the programme “sound and robust” and on track. Nine days later, an independent quality assurance check concluded it probably could not be delivered at all. In July 2026, Blakeley admitted to the Privileges Committee: “We got it wrong.” Finance Minister Chris Bishop called the project “a disaster.”

Our Future Services: Warning Signs Already

The eight-year replacement programme is about a year and a half old and is already struggling. A Stanford review found that the original business case overstated the savings. It counted on cutting 118 full-time roles and reducing overhead in IT, property and corporate services, yet most of that overhead does not shrink when headcount falls. The promised 30% productivity gain has not materialised; student visa processing is running at only 7–20% above baseline. Treasury has rated the programme “high risk.”

Straight Talk for Workers and Sponsors

User-pays was a deliberate policy choice, and the 2024 rises were presented as ending a taxpayer subsidy for immigration. You can argue that on its merits. But this new deficit is not a policy result. It is the price of a failed project, an over-optimistic business case and vendor liabilities that are still unresolved. MBIE has acknowledged that bringing the visa account back to surplus will take spending cuts as well as “revenue recovery measures”. Put plainly, that means higher fees, paid by employers and migrants who had nothing to do with the BCU's failure.

Practical advice: plan your budget using only the fees published by INZ, and be suspicious of anyone who quotes you “special” visa prices or asks you to pay outside official channels. A genuine employer will never ask you to pay for a job offer. Whether you are applying from Nigeria or anywhere else, verify every cost yourself before any money leaves your account.

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