New Zealand Visa Fees May Rise Again: The Failed IT Project Behind It, Explained Simply

News · 2026-09-04 · 6 min read

Do you sponsor overseas workers in New Zealand, or are you planning to apply for a New Zealand visa yourself? Then you may soon pay for a government IT project that never worked. This year, Immigration New Zealand (INZ) has a $90 million shortfall in its visa accounts. A new fee review is planned before the end of 2026. That is only about two years after the previous review. For businesses that depend on skilled migrants, this is not just a news story. It is an early warning about your next bill.

Where the $90 million hole comes from

There are two main reasons for the shortfall.

A new automation programme. The first reason is the continuing cost of Our Future Services. This is a $336 million project to automate the system, and it is still in its early years.
A biometric system that failed. The second reason is what was left behind by the Biometric Capability Update (BCU). The BCU was supposed to update how INZ manages biometric data. It ran for seven years, from 2018 to late 2025. Then it was cancelled, and it produced nothing that could be used.

The cancelled system still sends bills

In the 2026 Budget, the official write-off for the BCU was $31.2 million. That number did not last. In July 2026, MBIE chief executive Nic Blakeley revealed another $6 million in costs linked to the project. These costs had not been shared before. He also said he could not confirm that this was the complete total.

By early September 2026, reports from the NZ Herald put total known losses at close to $40 million. Even then, MBIE still could not say that the costs had stopped growing.

More costs may still come

There is still more risk ahead:

INZ may have to pay BCU contractor NEC up to $12 million.
This is in addition to NEC's own claimed losses of at least $4 million.
There could also be penalty charges of up to $750,000 per month, because a 2025 delivery deadline was missed.

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

What the investigations found

How can a project run for seven years and deliver nothing? An independent review led by Greg James explained the problems in very direct language. According to the review, the project:

started in 2018 without proper analysis
skipped due diligence when it was rescoped in 2020
set up its governance too late to make a difference
let problems grow outside the normal reporting lines

A separate 1News investigation went even further. It asked whether MBIE arranged the costs to stay below the $35 million limit. Above that limit, the project would have had to go before Cabinet.

Positive reports, worrying reality

What managers said inside the organisation was very different from what was really happening. A project update on March 19, 2024 called the programme "sound and robust" and said it was on track. Just nine days later, an independent quality assurance check found it probably could not be delivered at all.

Blakeley finally admitted this to the Privileges Committee in July 2026: "We got it wrong." Finance Minister Chris Bishop was just as direct. He called the project "a disaster."

Problems with the new replacement system

Our Future Services is the eight-year programme that is meant to replace the failed system. It is only a year and a half old, but there are already signs of trouble.

A review by Stanford found that the original business case promised too much in savings. The plan depended on cutting 118 full-time roles and lowering overhead costs in IT, property and corporate services. However, most of those overhead costs do not fall when the number of staff falls. The promised 30% productivity improvement has also not happened. Student visa processing is only 7–20% above baseline. Treasury now rates the whole programme as "high risk."

Why migrants and sponsors end up paying

This is where a government accounting problem becomes a hiring cost problem. After the fee and levy changes of 2024, INZ's funding moved almost completely onto the people who use the system.

According to Turner Hopkins Immigration's August 2026 analysis, the 2024/25 revenue mix was roughly:

50% from fees
40% from levies
only 9% from general taxation

This means about 91 cents of every dollar that INZ spends comes straight from migrants and the employers who sponsor them. Their conclusion was simple. If users pay for almost the whole system, they have every right to expect it to be managed responsibly.

The fee jump of 2024

This change in funding already hurt in 2024. Skilled residence visa fees rose from $4,290 to $6,450. Student visa fees doubled to $750. INZ's own Cabinet paper from that year expected ICT spending to rise from $13.3 million in 2024/25 to $58.2 million by 2027/28. That is a fourfold increase. A big part of it comes from old legacy systems that the BCU was meant to replace, but never did.

Who should really carry the cost?

The user-pays model was a planned policy decision. The 2024 increases were presented as a way to end taxpayer support for the immigration system. On its own, that position can be defended.

But the new deficit is not the result of policy. It comes from a failed project, a business case that was too optimistic, and debts to suppliers that are still not settled. MBIE has admitted that bringing the visa account back to surplus will need both spending cuts and "revenue recovery measures." In simple words, fees will go up again. The employers and migrants who had nothing to do with the BCU's failure will be the ones paying for it.

Planning tips for Indonesian applicants

If you are looking at sponsored jobs New Zealand for Indonesian workers, include possible fee changes in your budget and check the official fees before you apply. Prepare your English-language CV early, and get your Indonesian-language documents translated into English as the visa rules require.

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