Immigration project wasted millions, finances remain unclear

• Biometrics project marked by 'creative accounting'
• Minister says more than $30 million wasted
• Reviews investigating what officials and governance staff knew, and what they told ministers

Soaring costs in a troubled immigration project have left officials unable to say how much was spent.

An independent report found the Biometric Capability Upgrade (BCU) delivered no measurable benefits and an uncertain price tag before it was dumped last year.

It said the rationale for several cost changes remain unclear and tracking total project expenditure had been 'challenging'.

Immigration minister Erica Stanford said staff deliberately withheld information from her and the previous Labour government, and wasted more than $30 million.

She said Public Service Commissioner Sir Brian Roche would investigate integrity concerns raised by the review.

The report detailed time and budget over-runs and the merging and later separation of the BCU project from another called IPE (In-Person Enrolment). Both were started seven years ago to modernise core components of the Identity Management (IDme) immigration system, such as photographs, fingerprints and other biometric data.

"While each major change request increased the project's Whole of Life Cost, the underlying rationale for several cost shifts, particularly those in 2024 that triggered ministerial concern, remains unclear" said report author Greg James.

"A total of $4.44 million was transferred out of the project between 2022 and 2025, further complicating cost transparency."

Some officials interviewed said the project's unclear finances were a result of attempts to keep costs below Cabinet's mandated limit - it could spend $35m before having to ask Cabinet for funding approval.

"Interviews indicated widespread uncertainty about the true cost of delivery, with some staff characterising financial management practices as 'creative accounting,' largely driven by efforts to avoid exceeding the Cabinet-level funding threshold."

The report said because the project initially began as an upgrade within Immigration NZ's (INZ) delegated authority, it was not treated as a high-risk project, nor did it use treasury's Gateway process for complex initiatives.

INZ started the project - but it moved to the Digital, Data & Insights Group within MBIE as part of a 2022 organisational restructure.

Red flags could have alerted officials, and led to the programme being halted - and may have saved some of the $30m Stanford said was wasted by 2025.

The report is also clear that no-one really knows how much was spent.

"Current estimates indicate costs of approximately $35 million for BCU and $8.5 million for IPE, though earlier records suggest BCU alone may have approached $40 million."

What INZ said in 2023/4

The integrity concerns that will be investigated by the Public Service Commission may include whether ministers were misled about how well the project was going, staff being moved from the project when they raised concerns and questions about the 'creative accounting'.

Stanford said the findings were "almost as bad as it gets," including not seeking ministerial approval at each stage. "It's supposed to be signed out [by Cabinet] every time the whole of life cost goes up, as far as I've been advised. And that seemingly did not happen, and even when it did happen, the advice was very minimal," she said, adding that she had been given advice that turned out to be 'complete fiction.'

A 2024 briefing to Stanford, seen by RNZ, showed how the project's costs escalated since 2019, including a doubling of capital expenditure and four increases in as many years to its whole of life cost (WOLC) - from $19.5 million to $35m by 2023.

"To date, the BCU has not required cabinet approval," MBIE told RNZ in 2024.

"Cabinet approval is only required if Whole of Life Costs is greater than $35m. Joint ministers approved the upgrade under their delegation in July 2023."

Joint ministers was possibly a reference to border ministers, such as immigration and customs. No mention was made in today's James report about the July 2023 decision, noting instead that a month earlier BCU's budget increased to $31.95m, citing tech firm NEC's "delays in addressing security vulnerabilities, data migration, and technical documentation. Go-live was moved to November 2023".

By autumn 2024, BCU costs had reached $39.9m - but then seemingly went down.

"As estimated costs were now expected to exceed $35 million, Cabinet approval was required," said the report of what MBIE wanted in April 2024. But by August costs were said to be back within the $35m.

"No project documentation and governance documentation after March 2024 provides any rationale for what changes were then made to enable the project to stay within the original WOLC," concluded James.

"This was even more surprising given that the project was again significantly further delayed to mid-2025."

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