Democracy Briefing: What’s wrong with the public service?

Erica Stanford is furious. Publicly, explicitly, on the record, at her own officials. That is not a normal thing for a minister to do. Normally the game is managed disappointment: a careful press release, an assurance that lessons will be learned. Stanford blew that up. Standing before a parliamentary select committee on Tuesday, she described what she’d learned about Immigration New Zealand’s biometric technology project as “a trifecta of terrible things,” said the information she had been given was “diametrically opposed to the truth,” and told the Herald she no longer trusted the advice she received from officials. “Almost as bad as it gets.”

She was right to be furious, and it was healthy that she didn’t just seek to give the usual reassurance. Because that instinct to smooth things over, to treat this as an awkward but manageable embarrassment is itself part of the problem in New Zealand’s political system.

What actually happened

The bare facts first. Immigration New Zealand’s Biometric Capability Update (BCU) was launched in 2018 to modernise a creaking identity management platform. It ran for seven years, cycled through at least twelve project managers, three programme directors, and six project sponsors, accumulated more than 170 change requests, spent somewhere between $31 million and $40 million of taxpayers’ money, and delivered nothing. The Budget this year wrote off $31.2 million. The underlying system — still running on a biometric algorithm from 2012 — remains in place.

That, by itself, would be an embarrassing waste. Big government IT projects fail. They fail here as readily as in Australia or Britain. INCIS, the NZ Police’s computerisation disaster in the 1990s, consumed $100 million. Novopay, the schools payroll fiasco, blew out by nearly $24 million and had teachers underpaid or not paid at all. Costly failures are a recurring feature of the public sector IT landscape, not an aberration.

But the BCU scandal is not mainly a story about a failed IT project. What turns it into a democratic integrity crisis is the suite of behaviours layered around the failure: the misleading of ministers, the removal of staff who raised concerns, and the deliberate manipulation of financial structures to avoid Cabinet scrutiny. That’s the trifecta. Each element is serious on its own. Together they represent something qualitatively different: a breakdown in the constitutional chain of accountability that is supposed to run from public servants, to ministers, to Parliament, to us.

The cover-up, not the catastrophe

The independent review by consultant Greg James (commissioned by Stanford after she became suspicious) found that ministerial reporting was “inconsistent and, at times, overly optimistic or misleading.” One particular sequence captures the problem with clinical precision. In September 2023, an independent quality assurance review told MBIE the project had “poor delivery history” and that reviewers had “doubts as to whether the project will in fact deliver at all.” What MBIE subsequently told Stanford was that “the project approach was sound and robust, the build is achievable, and the risk management practice is effective.” When Stanford traced the discrepancy, MBIE blamed a junior staffer.

There is a name for that: a classic accountability shield. When something goes wrong, the junior staffer did it. The former chief executive Carolyn Tremain eventually sent an apology letter acknowledging the mismatch was “incorrect and misleading” — but maintained there was no deliberate intent. Whether it holds up is for the Public Service Commission to decide.

The second element of the trifecta is uglier. The James review found that staff were removed from the project when they raised concerns about its viability. A former insider, speaking anonymously to the Herald’s David Fisher, was blunter: “There was poor governance and poor controls. If you were a staff member and you questioned it then you’re gone.” And then: “If you stand up and you whistle-blow, you’ll never work again.”

The same source told Fisher there are other projects just like it currently underway.

The third element — the creative accounting — is perhaps the most deliberately evasive of the three. Under Cabinet rules, projects whose whole-of-life cost exceeds $35 million require Cabinet approval. When costs began approaching that threshold, officials first attempted to slip a budget increase into an unrelated Cabinet paper. Stanford refused. They then restructured the project so costs fell below the $35 million line. MBIE officials later admitted to Stanford that this was intentional. The rule designed to trigger oversight was engineered around.

The “aberration” problem

Public Service Commissioner Sir Brian Roche has called all this a “complete lack of integrity” and “an affront to the people who work every day on behalf of New Zealand.” He’s launched a formal investigation. He’s promised to leave no stone unturned.

But Roche also called it “an aberration.” That word deserves scrutiny.

Nicola Willis offered something similar, insisting the scandal was not “symptomatic of wider issues” in the public service. These are understandable things for people in their positions to say. Roche is trying to protect the reputation of the institution he runs. Willis needs public confidence in the same bureaucracy she is simultaneously asking to cut 8,700 jobs and implement AI transformation. Neither can afford for this to be treated as typical.

But is it actually an aberration? The Otago Daily Times editorial this week asked the key question: “How often does that behaviour occur across our agencies?” It was, the editorial noted, “not clear why it took so long for the Public Service Commission to get involved, or even if questions have been asked of the Audit Office.” The newspaper warned that “if all that happens as a result is a few heads rolling and everyone moving on, an opportunity will have been lost.”

RNZ’s Gill Bonnett, who had been asking questions about this project through Official Information Act requests since 2024, put it plainly: “It’s not just about wasted money — the integrity of the public service has been called into question over the way officials ducked and dived to avoid telling ministers how badly wrong the project was going.” This wasn’t a sudden revelation. The warning signs had been visible for years to anyone paying attention.

Former Labour immigration minister Andrew Little told RNZ the revelations were “consistent with the kind of relationship I had with immigration officials.” Stanford is a National minister. Little was in Labour. Three successive immigration ministers, across two different governments, appear to have been managed rather than informed. Whatever was happening inside MBIE, the problem was institutional rather than partisan.

There is also an uncomfortable irony worth naming. As Opposition immigration spokesperson, Stanford criticised Andrew Little for poor oversight of MBIE. She was right to. Now she is experiencing the same dysfunctional relationship herself — from the inside.

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