The New Zealand government’s recent decision to raise immigration fees, effective from October 1, 2024, has expectedly sparked concern and criticism. At first glance, the move seems to align with the government’s election promise to make Immigration New Zealand (INZ) a self-funding entity.
The government’s announcement outlined that the new visa fees are expected to generate over $563 million over the next four years—approximately $140 million per year. Immigration Minister Erica Stanford justified the increases by citing the rising costs associated with visa processing, managing higher-risk applications, increased compliance costs, and the need to upgrade Immigration New Zealand's ICT systems. These are legitimate concerns, but they don’t fully explain the scale of the fee hikes.
To put things into perspective, the forecasted deficit for INZ at the end of the 2024 financial year was just $32.2 million. This figure pales in comparison to the $140 million per year that the new fees are expected to bring in. Clearly, the new fee structure is designed to generate far more revenue than what is required to make INZ self-sufficient.
Critics have pointed out that these increases are less about covering INZ’s operational costs and more about finding ways to finance the government’s election promise of tax cuts. Given the current economic downturn, the government has been under immense pressure to deliver on this promise. But instead of cutting unnecessary expenditure or finding other sources of revenue, it seems the government has chosen to burden immigrants with the cost.
This is not the first time we have seen such tactics. Governments around the world have often turned to easy targets—such as immigrants—to generate quick revenue. In New Zealand’s case, the move is particularly short sighted. At a time when the country is teetering on the edge of a recession, immigration has been one of the few bright spots.
Economists have repeatedly pointed out that the influx of skilled migrants has been crucial in keeping the economy afloat. Instead of encouraging more immigration to stimulate growth, the government’s fee hikes could deter potential migrants, thereby stifling one of the key drivers of economic resilience.
The new fee structure is not just a burden on individual migrants; it also has the potential to cause significant hardship for migrant families. The cost of a Skilled Residence Category migrant visa, for instance, has jumped from $4290 to $6450. The Entrepreneur Residence Category visa has seen an even more dramatic increase, from $6860 to $14,890. These fees are prohibitively high for many, particularly those who are already struggling with the high cost of living in New Zealand.
The hike could also potentially discourage visa applicants or reduce migration. While the minister claims the fees are competitive with Australia, New Zealand’s economy is weaker. Instead of raising fees, INZ should address issues like inconsistent decisions and untrained staff. The financial burden will hit employers and visa holders hard, forcing many to rush applications before October 1, adding pressure on an already strained system.
The increases are likely to exacerbate issues related to overstayers and undocumented migrants. As the fees rise, the cost of regularising one’s immigration status becomes more daunting, pushing more people into precarious situations. This, in turn, could lead to a rise in exploitation and abuse, particularly in industries that rely heavily on migrant labour.
The government’s strategy of using immigration as a revenue generator is not only unfair but also self-defeating. By making it more difficult and expensive for migrants to settle in New Zealand, the government risks cutting off a vital source of economic growth. Skilled migrants bring with them the expertise, innovation, and diversity that are essential for New Zealand’s long-term prosperity.
Relying on immigration to fund tax cuts creates a volatile and unsustainable financial model.
Immigration numbers can fluctuate significantly from year to year, depending on global conditions. The COVID-19 pandemic was a stark reminder of how quickly these numbers can change.
As the October 1 implementation date approaches, it is crucial for the government to reconsider this decision. A fairer, more sustainable approach would be to balance the need for immigration system funding with the broader economic and social benefits that immigration brings to the country.
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