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A proposal to review Immigration visa fees and levies is undergoing review of submissions, with public submissions having closed on Sunday 22 July 2018.

Immigration fees and levies are set out in Immigration Regulations. They need to be reviewed by government regularly to ensure that they remain fit for purpose. The Office of the Auditor General recommends a three-year review cycle and the last review was in 2015, so a review is underway this year.

According to Ministry of Business Innovation and Enterprise (MBIE) (which Immigration New Zealand comes under), since 2015, the costs of maintaining an effective immigration system, as well as the structure of these costs, have changed. This they say is due to increasing traveller flows, growing focus on risk, compliance and verification, as well as the continuous improvements Immigration New Zealand (INZ) is making to its operating model.

MBIE have looked at different ways of recovering costs under the ‘full cost recovery’ principle.

Changes to visa fee as part of proposal

Changes to some visa fees (to address under and over recovery of costs) is one component of the model, along with others such as investing in border security, regulation of immigration advisers, and overall recovering the account deficit in the next 3-5 years.

Proposed cumulative changes to visa fees and levies include:

  • Removing the $20 online discount for certain visas
  • Increasing the employer accreditation fee by 20%.
  • Work visa fees increasing by 54% (excluding Recognised Seasonal Employer scheme, Working Holiday visas and work visas granted on humanitarian grounds);
  • Student visa fees decreasing by 6.5%;
  • Group visitor visa fees decreasing by 45%;
  • Business visa fees decreasing by 1%;
  • Other visa fees increasing by 10% (including specific work visas excluded above);
  • All levy rates increasing by 43%

Note that  these are cumulative increases and reflect proposals in a package of 5 components over 3-5 years. For Work Visa 54%, total impact reflects cumulative percentage changes of the components applied on top of the preceding component, rather than the sum of percentages for each component.

So one work visa application fee may not necessarily increase by 54% straight away.

Revising visa fees is likely to involve:

  • increasing most work visa fees by 40%
  • decreasing most student visa fees by 15%
  • decreasing group visitors visa fees by 50%
  • decreasing business residence visa fees by 10%

How the immigration system is funded

The government immigration system is paid for in large part by fees and levies recovered from migrants. This helps cover the cost of the private benefits migrants receive, including immigration services, as well as compliance, border and regulatory activities and public benefits.

There is also Crown (public) funding, funded by the New Zealand taxpayer, in recognition of public benefit to New Zealand in border security and a well-functioning labour market.

Currently immigration visa processing and assessment is  95% funded through fees.

However, this doesn’t appear to cover INZ costs as it lost $20 million on work visas alone.

Reason for proposed change

MBIE needs to recover costs in this area. In 2016/2017 Immigration New Zealand had a shortfall of $11.3 million dollars in costs compared to visa revenue and the deficit is forecast to reach $50 million by the end of 2017/2018.

MBIE have also recognised that some visa fees are higher than they should be while others are lower than they should be, compared to how much they cost to process. These variances are due to changes in the time taken and resources required to process different types of visa. For example, more time is being spent assessing things like employer sustainability.

The online processing discount was introduced to encourage more online applications. However, it has been found that it has not reduced workload and the discount incentive is no longer needed.

While MBIE invested $140  million  in technology for INZ to move visa processing online,  Immigration NZ deputy chief executive Greg Patchell said that was necessary and without it, there would be further loss and the proposed increase on visas would be higher. He said although the changes made have made processing more efficient, other issues arise.

Consultation

The government sought feedback on the proposals, including on the impact to visa applicants and other issues for consideration in June this year and submission closed on 22 July.

Some employers and industry representatives have raised concern that increasing visa fees will deter migrant and impact on the workforce. For instance, Hospitality NZ opposed the change, saying the industry needed 10,000 more restaurant and cafe staff over the next two years and there were not enough New Zealanders with necessary skills to take up the roles. It was believed a fee increase would deter prospective migrants from coming to New Zealand.

Implications

Under the proposed changes, most work visas would increase from  $260-375 to $440-580. Student visa fees would be balanced for hardcopy and online to around $270 and $200 from the Pacific region.

Along with other changes, such as increasing the cost for employers to gain an accreditation from Immigration by 20 percent, that would balance Immigration NZ’s account within three years.

Immigration Minister Iain Lees-Galloway said “The proposed increase in visa fees and levies is a small part of the total cost of visiting, working or studying in New Zealand.  New Zealand charges remain competitive compared to other countries such as Australia, the United Kingdom and Canada.”

INZ Deputy Chief Executive said that despite improvements in technology, other risks and issues have arisen.  He also said the increase in visa pricing would not necessarily reduce processing times.

Parliament will vote on the changes next month which may be spread over 3 or 5 years.

Final decisions are expected in September. If the proposed changes are adopted, fees and levy changes are expected to come into effect this November (2018).

We recommend people who will be needing new work visas and are concerned about the work visa fee increase see us about applying before then!

To check your eligibility and apply for a visa contact us

Best wishes,

Immigration Centre Team.

References: MBIE consultation paper,  Radio NZ