New Zealand Immigration Visa Processing Funds $ 135 Million Over Budget

By Gill Bonnett of RNZ

The hole in the immigration books in New Zealand has exploded to nearly $ 135 million and it has been more than a decade since the agency raised more in visa revenue than it spent.

Immigration New Zealand (INZ) said that since the border was closed it had taken steps to reduce travel and recruitment costs and reassigned some staff.

He has not answered questions about whether there will be layoffs, but he told the immigration minister that he needs to “properly size” his operations.

The deficit in its visa memorandum account, which reconciles department costs and user fees, reached a record $ 65 million in the year through July 2019. That had dropped to $ 58 million in February. 2020, but the decline in visa revenue this year meant the deficit continued to grow, reaching $ 134.6 million at the end of the June financial year.

A briefing for incoming immigration minister Kris Faafoi, who replaced the fired Iain Lees-Galloway in July, highlighted the scale of the problem.

He said that since most of INZ’s operations were financed with visa fees and levies, with the sharp decline INZ faced a substantial financial challenge and needed to make significant changes to its operations “to adjust the size of the company.” The rest of that section of the briefing, published under the Official Information Law, is redacted, and INZ has not commented on the possibility of layoffs.

In an updated report after the elections, “ensuring sustainable models from an operational and financial point of view” for INZ is one of the four items under “immediate priorities”.

“The reduction in visa applications caused by Covid-19 has worsened the deficits that existed before Covid-19 due to drops in fees and third party levies,” he said.

“The visa processing system must be resilient and flexible to respond to a changing and uncertain environment.”

The drop in visa volumes is marked. In the year 2018/19, INZ issued one million visas for 1.9 million people; In the six months to the beginning of December, only 133,915 visa applications were processed. He had forecast the 2020/21 funding of customer fees to be $ 269 million, but is now expected to be $ 134 million. That suggests that the taxpayer will pay almost half of INZ’s funding, compared to the expected proportion of less than a third.

‘Perfect storm of disasters’

Immigration attorney Alastair McClymont said Covid-19 had compounded a budget explosion in the multi-billion dollar shakeup of global immigration branches three years ago. Cost savings from that project had not lived up to predictions and other factors played into the shortfall.

“The application fees that applicants pay cover much of the processing costs,” he said.

“Probably the most expensive of applications are qualified migrant resident visa applications and people have not been able to submit those applications for most of 2020 so they would have had a huge impact on that as well.

McClymont said there were also backlogs where INZ needed to place staff and a “lack of residency program numbers to process applications.”

“It has been a perfect storm of disasters for New Zealand Immigration. It seems that they are just moving from one disaster to another … it seems to be a department that is in complete chaos.”

Visa budget

The last time the visa budget was in surplus was in 2008/9. The auditor general pointed out in 2012 that the visas and permits memorandum account, as it was then, had a deficit balance of $ 36.4 million and that “if clear plans are not put in place, entities run the risk that surpluses or deficits become uncontrollable. ” “

Visa applicants pay most of the cost of running the immigration processing facilities, while the taxpayer funds certain items, such as refugee services and policy advice.

By 2018, the visa memorandum account had not been in surplus and was getting worse, this time not because of a lower number of visas, but after many more people applied than anticipated, which the then immigration minister described as “extremely inaccurate” predictions.

The cabinet increased visa fees (work visa fees increased by as much as 54 percent) due to forecasts of a net operating surplus for 2017/18 that would “reduce the account deficit and bring it closer to zero”. The report of a consultation on those increases noted that a “number of stakeholders argued that INZ should work harder to minimize costs and maximize efficiency in its business process and visa processing.”

There were also more injections of government money: $ 120 million in operating funds over five years.

Cost-saving movements

An INZ spokesperson said that as of March 2020, the full effect of global lockdowns and border restrictions caused the third-party revenue that INZ receives to decrease significantly and as a result, the memorandum account deficit increased.

“As a result of the changes in the volume and type of applications received and the dire financial situation, MBIE has made a short-term cost saving effort across the entire immigration program, including rigorous scrutiny of all travel and recruitment. planned, “he said. .

“INZ has also made a number of operational decisions to better reflect the current situation. This includes the reallocation of visa processing staff to ensure that resources are focused on visa categories where volumes remain stable, as well as reallocation staffing to other parts of MBIE, including some for managed isolation and quarantine, however, is a short-term response to the immediate situation and takes advantage of the fact that activity in some areas has been reduced.

“MBIE is subject to internal and external monitoring of its financial management. At a high level, all expenses must comply with the guidelines of the Treasury and the Public Finance Law. INZ periodically reviews our operating model and financial position and we will continue to do so in line with any changes to the global Covid-19 pandemic and current border restrictions. “

– RNZ