RNZ’s latest red-flag count exposes a procurement system that never really worked

The bodies keep turning up

Every time Wellington starts digging into its digital estate, it finds another project in trouble. The latest two, reported by RNZ on 12 August, are the Justice Ministry’s audio-visual links in courts programme and Internal Affairs’ Civil Registration replacement, the system that records every birth, death and marriage in the country.

The Justice project sits inside the $170 million Te Au Reka digitisation programme. Its remote-participation stream received a red Gateway rating in May 2025, meaning it “appears unachievable”, and was the only one of ten high-risk investments reviewed that quarter to score red. More than a year on, the ministry says it is “not in a position to provide further detail”, with the choice of technology, originally due in early 2025, still unresolved.

Internal Affairs is on its second attempt at Civil Registration, having written off $23 million when the first was dumped in 2024. It is still in dispute with Australian supplier DWS over that failure. The second attempt drew an amber/red rating in January 2026, and the department admits the scope “has not yet been determined”. Options won’t reach Cabinet until next year. Meanwhile the old system limps on, “stable (although increasingly expensive to modify)”.

This is not bad luck, it’s the system working as built

The pattern is well established. MBIE wrote off more than $30 million on a failed biometric system. In September 2024, Health NZ’s payments upgrade, which distributes $12 billion a year, had ballooned from a $116 million budget to $140 million and was rated “unachievable”, with issues that “do not appear to be manageable or resolvable”. A botched immigration IT project that began in 2018 was eventually cancelled after nearly $40 million in sunk costs.

The watchdogs have stopped mincing words. The government chief digital officer’s assessment in the December 2025 Treasury report called agency investments “siloed, duplicative” and delivering “little system benefit”, with too many projects “overly large” and spanning multiple years. The chief data steward noted that six consecutive quarters of submissions pointed to “continued lower confidence” in agencies’ capacity to deliver. Six quarters is not a blip. It is a trend heading the wrong way even as reform is attempted.

The numbers are worse than any single failure suggests

The DIA’s September 2025 paper on digital costs put system-wide figures on the problem. There is a $13 billion investment pipeline over five years, one-third of it unfunded. 59% of core digital projects are behind schedule and 85% are rated high risk on size and complexity. Adopting modern practice could save an estimated $1.2 to $3.6 billion over five years. That is money currently being burned on waste and rework.

The supplier question is the whole story

Here is what matters for NZ’s tech sector. The DIA paper states plainly that the current model relies on large suppliers while smaller firms “cannot bid for multi-year projects”, driving up cost and stifling competition. The structural incentive is worse still: as former public servant Ian Fletcher argued of the MBIE debacle, governments make poor customers because they outsource the judgment about what to build to the very firms being paid to build it.

Public Service Commissioner Sir Brian Roche’s rapid review, released in July 2026, diagnosed weak prioritisation, a low-impact digital authority and an approval process designed for big capital programmes rather than iterative technology. He found foundational projects like digital identity and data exchange “drifting without clear strategy”, leaving NZ behind Australia, Singapore and the UK.

What actually changes for business

The government has already banked roughly $800 million on digital procurement savings, with 57% of a recent year’s spend flowing through NZ-owned firms. That is genuine progress. But the reform’s real test is whether procurement moves to modular, incremental contracts that smaller suppliers can actually win. If it does, the $13 billion pipeline opens up. If the same large-contract model survives under fresh branding, the lockout continues and so do the red ratings. For the businesses that rely on courts, health payments and civil records to function, the stakes are not abstract. The systems are either failing outright or running on borrowed time.

Sources

• More tech projects struggling as govt tries to overhaul ‘siloed’ system (2026-08-12)
• Driving down the cost of digital in government (2025-09)
• Sir Brian Roche says digital delivery system needs reset (2026-07-03)
• Health NZ / Te Whatu Ora payment system upgrade in trouble (2024-09-17)
• Minister Erica Stanford reveals $6m more wasted on immigration IT project
• The MBIE Debacle – IT Failure Without a Fairy Tale Ending