Labour this week scaled up its criticism of current Ministry of Business, Innovation and Employment (MBIE) chief executive Nic Blakeley, arguing Blakeley must go, after Parliament’s Privileges Committee found he was among officials who deliberately misled MPs by not disclosing that the IT project had been scrapped months earlier.
The Taxpayers’ Union is adding to the pressure through a new ad campaign, targeting both Blakeley and Public Service Commissioner Sir Brian Roche after the latter refused the former’s offer to resign after the Privileges Committee ruling.
On billboards visible from the Beehive, a particularly gruff-looking Roche, wearing a cowboy hat and drawing on a cigar, is pictured on a mock wanted poster that sought a “Public Service Commissioner who promised honesty and integrity”, perhaps inspired by Winston Peters previously calling for officials responsible for the project to be imprisoned.
The Taxpayers’ Union ads can be seen from the Beehive. Photo / Taxpayers’ Union
Another mocks Blakeley by claiming Pinocchio is the mega-agency’s new boss.
Roche has defended his decision not to accept Blakeley’s resignation by highlighting that Blakeley had limited involvement in the project and only became chief executive in January, two months before he and others appeared before a select committee and when asked for an update, failed to mention the project had ended.
Blakeley has committed to implementing the string of recommendations that will no doubt come from the many internal and external reviews underway into what happened.
While ministers continue to state their confidence in Blakeley, the Public Service Commission’s review, led by former Solicitor-General Michael Heron, KC, stands as particularly consequential to Blakeley’s future.
Since its launch in 2019, the progression of the BCU project – described as a significant update to Immigration New Zealand’s identity management system and crucial to managing identity fraud – includes years of delays, out-of-control cost escalations, persistent defects plaguing progress and allegations of officials using “creative accounting” that prevented Cabinet oversight.
The Heron review will test the creative accounting allegations, but the ease with which Immigration Minister Erica Stanford and other ministers are willing to repeat it is telling. It’s unclear when Heron’s review will be returned, but Roche has indicated he wants the matter resolved before the election.
Documents released to the Herald under the Official Information Act reveal more about the project’s failings, while raising further questions about what should have been seen by Cabinet and when.
The project, initially worth $10 million with an expected completion date of September 2020, went through at least six formal change processes, had 15 different managers in seven years, endured more than a dozen deferred “go-live” dates and suffered ongoing cost blowouts, with the highest estimate reaching $53m.
Immigration Minister Erica Stanford has been bold in her criticism of officials. Photo / Mark Mitchell
Countless briefings to Stanford and her predecessors, namely Labour ministers Kris Faafoi and Andrew Little, explain delays away by blaming a diversion of resources during the Covid-19 pandemic, evolving cybersecurity guidelines and a full rescope of the project, transforming it from upgrading the old system to implementing a new one.
That was complemented by warnings from officials about scrapping the project as it encountered more defects. An update to Stanford in March 2024 said if the project was abandoned, it would leave Immigration New Zealand with a system that prevents illegal migrants entering the country at “end of life” as well as “sunk costs of approximately $25 million+, leaving Immigration New Zealand no further ahead than when the project started in 2019” (sunk costs have since risen to $40m with no guarantee the bleeding stopped there).
Critical to Heron’s review will be whether officials took deliberate action to avoid the project’s failings being uncovered by Cabinet, which requires oversight should projects exceed $35m.
A briefing in July 2023 to Little, who had then approved a funding increase to $35m, shows officials acknowledging the risk that “whole of life costs” could grow above $35m while promising its delivery governance board was “closely monitoring the project”.
Officials’ fears heightened in September, with the admission there was a “real risk that all of life costs will exceed $35m” and acknowledgment that Cabinet approval would be required. However, at the time Little had not taken requests for further funding to Cabinet, with officials saying there “may be a need to engage Cabinet after the general election”.
In April 2024, with Stanford as minister, minutes from the governance board meetings reflect Stanford’s inquiries into the project after recommendations to add a funding increase request to a separate immigration levy Cabinet paper were not accepted.
It’s at this point the board appears to approve splitting the project into two: the BCU project and the In Person Enrolment project. The minutes show the split, which enabled the BCU costs to stay under $35m, and further funding increases were “approved in principle subject to Cabinet approval”. A later memo to the board in May suggests “there is a risk that the Cabinet may not approve the increase in threshold for [whole of life costs]”.
The Taxpayers’ Union is running an ad campaign that calls for MBIE chief executive Nic Blakeley to be sacked. Photo / Taxpayers’ Union
Despite Stanford receiving weekly updates for months, it’s understood neither the minister nor Cabinet were informed of the split, which appears to have been formally confirmed in December 2024.
While reportedly unaware of the split, Stanford acknowledges she and former chief executive Carolyn Tremain were heavily involved in monitoring the project as independent advisers suggested completion was still possible, despite the go-live date being revised five times in 2025 alone before it was scrapped in November.
The level of Blakeley’s involvement isn’t yet clear. Formerly an MBIE deputy secretary since July 2023, his name appears only once in the released documents, Blakeley having penned a letter in January this year to the company that had tried to deliver the project, floating the idea of working together on future projects.
Blakeley is considered a competent public service chief executive by Roche and Government ministers, which no doubt played a part in his survival thus far.
However, should Heron’s review find a pattern of behaviour designed to avoid scrutiny of the use of public money, it’s hard to argue the person at the top shouldn’t face ultimate accountability.
The saga begs the question whether policies proposing to cut or merge ministries will deliver better results.
There are clear benefits to merging, including limiting wasteful spending and reducing duplication in back-office functions such as IT. But it comes with risks of compromising oversight if ministries grow to the extraordinary size MBIE is now.
And if Tremain – considered among the best leaders to have served in the public service – couldn’t straighten out such a plagued project, what hope is there for less proficient chief executives managing larger agencies with tighter budgets?
Adam Pearse is the Deputy Political Editor and part of the NZ Herald’s Press Gallery team based at Parliament in Wellington. He has worked for NZME since 2018, reporting for the Northern Advocate in Whangārei and the Herald in Auckland.