The Ministry of Business, Innovation and Employment has a new phrase for failure. Its 2025/26 annual report, released on Monday, shows 40 percent of major capital projects missed their scope, time or budget targets. Delivery came in at 60 percent against an 85 percent target, worse than the previous year’s 66 percent. MBIE blames ‘planning optimism’ and ‘contractor performance issues’. The report lands after Parliament’s Privileges Committee found MBIE officials deliberately misled MPs by failing to disclose in March 2026 that a flagship project had already been discontinued.
That is not optimism. Optimism is believing a project will work. Concealment is knowing it hasn’t and saying nothing.
Seven years, zero working systems
The Biometric Capability Update (BCU) started in November 2018 as a maintenance upgrade to Immigration New Zealand’s identity system. According to the independent review by Greg James, it was rescoped in 2020 into a full system replacement without adequate due diligence. MBIE has confirmed the project was paused in November 2025 and discontinued without delivering anything usable.
The bill has grown with each disclosure. In September, chief executive Nic Blakeley confirmed the sunk cost had reached $50.7 million: $42 million written off on BCU, plus a recommended $8.7 million write-off on the linked In-Person Enrolment project, now deemed ‘unusable’. Chief financial officer Sharyn Mitchell acknowledged the asset was wrongly capitalised because officials relied on internal advice rather than seeking enough external advice. The new annual report admits BCU should never have been on the books in June 2025, a concern Audit New Zealand had already raised.
The numbers were known, just not shared
Ministerial briefings from February and March 2024, released under the OIA, show cost and schedule overruns were understood internally long before the public heard about them.
In June, Immigration Minister Erica Stanford put the waste at about $33 million and accused officials of misleading successive ministers and using ‘creative accounting’ to keep the project under the $35 million threshold that triggers Cabinet approval. The irony is hard to miss. Immigration deputy secretary Andrew Milne has since said the replacement will likely need Cabinet sign-off, and MBIE now estimates it will cost a further $35 million.
Blakeley remains in the job. Any private-sector board presented with this sequence, a misstated asset, a deliberately incomplete disclosure to its overseers and a nine-figure-adjacent loss trajectory, would be asking very different questions about accountability.
A pattern, not a one-off
MBIE’s own stocktake of 70 active technology projects worth roughly half a billion dollars found oversight and controls ‘generally in place but too patchy’, with a quarter of projects behind on delivery. The report warned that ‘inconsistencies in reporting, financial transparency, benefits management, portfolio classification and governance visibility reduce confidence’ in the ministry’s ability to catch problems early.
Deputy secretary Paul Stocks said he was ‘reassured by the fact that there were no surprises in these findings’. That should worry, not reassure. If a quarter of a half-billion-dollar portfolio running late is unsurprising, the baseline expectation is the problem.
The bigger programme now stuck behind it
BCU was never a standalone gadget. Our Future Services, the seven-year programme to modernise visa processing, was built assuming BCU would deliver the biometric backbone. It has been put on hold after 18 months and is under a Public Service Commission review led by David Hosking, examining governance, costs, benefits and whether BCU’s lessons have been learned. MBIE promises ‘more realistic baselines at project initiation’ and fewer change requests. Those are sensible words. They are also roughly what the stocktake promised a month ago.
Employers carry the delay
This is not abstract back-office waste. In 2024/25, MBIE processed 36,250 Accredited Employer Work Visa applications, more than 500,000 visitor visas and over 1.6 million NZeTA requests. Every business recruiting offshore, every tourism operator and every education exporter depends on that system running on modern, reliable infrastructure. A stalled modernisation programme means older systems for longer, slower fixes and more manual workarounds at exactly the point the economy needs migrant labour moving quickly.
There is also a credibility cost. MBIE is the agency that lectures business on compliance, governance and disclosure. A firm that capitalised a non-working asset and kept its regulator in the dark would be facing the Financial Markets Authority, not an annual report footnote.
The Public Service Commission reviews of BCU and Our Future Services are the next test. If they produce named accountability and a replacement project that goes to Cabinet honestly costed, this could be the year MBIE resets. If they produce another set of ‘strengthened governance’ commitments, expect next October’s report to find a fresh euphemism for the same result.
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