A Failed IT System Is About to Push Up New Zealand Visa Costs: What Sponsors and Applicants Should Expect
News · 2026-09-04 · 5 min read
A New Zealand government computer project collapsed, and the people now lined up to cover it are employers sponsoring foreign staff. This year Immigration New Zealand (INZ) is $90 million short in its visa accounts. A fresh fee review is planned before 2026 is out, a mere two years since the last. Any business leaning on skilled migrants should read that as a warning about its next invoice.
Where the money went
The shortfall has two roots. Our Future Services, an automation overhaul worth $336 million, keeps costing money while it is still young. Then there is the mess left by the Biometric Capability Update (BCU). Its job was to bring INZ's handling of biometric data up to date. From 2018 to late 2025, seven years in total, it ate funding, and when it was finally scrapped there was nothing usable to show for it.
The write-off that kept getting bigger
On paper, the BCU loss was set at $31.2 million in the 2026 Budget. That number soon proved too low. Nic Blakeley, MBIE's chief executive, revealed in July 2026 that another $6 million linked to the project had never been made public, and he admitted he could not promise there was nothing else. Come early September 2026, NZ Herald reporting estimated losses near $40 million, while MBIE still would not say the tally was complete.
The bill may not be finished either. NEC, the contractor behind the BCU, could be owed as much as $12 million by INZ. NEC also claims its own losses of at least $4 million, and penalty charges of up to $750,000 per month could apply because a 2025 delivery deadline was not met. Ministers have gone quiet on details while the Michael Heron KC inquiry runs.
Seven years, nothing to show
Greg James led an independent review that did not hold back. According to it, the BCU got going in 2018 with no proper analysis behind it. When the scope changed in 2020, nobody did due diligence. Governance arrived too late to help, and trouble was allowed to build up away from normal reporting channels. 1News, in its own investigation, went a step further and questioned whether MBIE kept costs under the $35 million mark on purpose, since crossing it would have meant taking the project to Cabinet.
The official story and the real one did not match. A March 19, 2024 project update said the programme was 'sound and robust' and on track. Just nine days on, an independent quality assurance check judged that it most likely could never be delivered. Blakeley eventually told the Privileges Committee in July 2026: 'We got it wrong.' Finance Minister Chris Bishop did not dress it up, labelling the project 'a disaster.'
Its successor is already wobbling
The replacement, Our Future Services, is an eight-year programme. Only a year and a half has passed, and the cracks are visible. Stanford reviewed it and concluded the original business case promised more savings than it could deliver. Those savings rested on removing 118 full-time roles and shrinking overhead in IT, property and corporate services, yet overhead like that mostly stays put when headcount goes down. The 30% productivity boost that was promised is missing too: student visa processing sits only 7–20% above baseline. Treasury has given the entire programme a 'high risk' rating.
Why sponsors and migrants end up paying
For employers, this is the bit that matters. Since the 2024 fee and levy overhaul, the cost of running INZ has fallen almost completely on its users. According to Turner Hopkins Immigration's August 2026 analysis, revenue in 2024/25 came roughly 50% from fees, 40% from levies and just 9% from general taxation. Put another way, around 91 cents in every dollar INZ spends is paid by migrants and their sponsoring employers. The firm's point was a fair one: people who fund almost all of a system can reasonably expect it to be well managed.
Applicants felt that change in 2024. The fee for a skilled residence visa went from $4,290 to $6,450, and the student visa fee doubled to $750. A Cabinet paper prepared by INZ that same year projected ICT costs of $13.3 million in 2024/25 rising to $58.2 million by 2027/28. That is four times as much, driven mostly by ageing systems that the BCU should have replaced but never did.
Paying for someone else's mistake
Making users pay was a conscious policy decision, and the 2024 increases were sold as the end of taxpayers subsidising immigration. You can argue for that. The current deficit is a different matter. It comes from a project that failed, savings forecasts that were too rosy and contractor claims nobody has settled yet. MBIE admits that restoring a surplus in the visa account will take spending cuts plus 'revenue recovery measures.' In everyday language, fees will rise again, and the bill will land on employers and migrants who played no role in the BCU going wrong.
If you plan to work in New Zealand from South Africa, build some room into your budget for higher visa costs, and check the current fees on the official INZ website before you lodge.
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