The August increase was noted as being lower than the 2025 rise due to cost-savings found by DIA.
As of April 2026, the Government’s account relating to citizenship fees had a deficit of $22.6m. Without the most recent fee increase, the deficit was forecast to rise to $68.3m by June 30, 2033.
The most recent update signals the highest recorded deficit for the Citizenship Memorandum Account, which handles costs and expenses.
Further fiscal restraint is signalled at DIA, which could impact jobs.
“Additional efficiency gains through further business process optimization are planned from 2026/27, which will result in a 10% reduction in LISO [Life and Identity Service Officer] resourcing, compared to what was previously planned to meet anticipated application volumes from 2026/27 to June 2033,” the paper said.
The paper said a “large increase in citizenship by grant applications is expected” as holders of the 2021 resident visa category become eligible to apply. The aforementioned visa granted residency to more than 212,000 people from the end of 2021 until 2024.
“Historically, around 65% of people with a residency visa go on to apply for citizenship. As a result, applications are forecast to rise sharply – by about 140% – peaking at over 102,000 in 2027/28 compared with around 43,000 in 2025/26, before tapering off by 2028/29,” Cabinet material read.
The cost of the tests for grant citizenship, being rolled out from late 2027, is yet to be confirmed. The paper said further Cabinet decisions would be needed to set the final fee level before finalising a delivery contract with a provider.
Before 2025, citizenship fees were last raised in 2003 as the account was in deficit. Reviews between 2007 and 2021 found the account was in surplus.
A 2024 fees review found another deficit, as costs for providing citizenship services were more than the revenue available in the account.
Multiple factors were listed in the paper as being behind an increase in costs, such as an 80% hike in the consumer price index since 2003, wage increases, hiring more staff, IT improvements, and citizenship ceremony costs.
Rent has also increased at the processing facility in Wellington’s Waterloo Quay, from $1.86m in 2020 to $2.18m in 2026.
“An analysis of expenses shows that, over the 10-year period from 2015/16 – 2024/25, citizenship expenses incurred by the Department have increased by 143% (from $12.429 million to $30.254 million). By contrast, revenue has only increased by 39%,” the paper read.
In a statement, DIA said the fee increase supports the return of the account to a neutral balance by 2033.
“The deficit is being recovered gradually so that costs are spread over time, and fee increases remain reasonable and affordable for applicants,” the agency said.
“The Department is committed to continuous improvement and is enhancing operational processes to improve productivity and efficiency in the citizenship service and manage the cost of delivery,” the agency added.
The Government’s citizenship account is currently in its highest deficit on record.
Fees are set to next be reviewed in 2028.
Azaria Howell is a multimedia reporter working from Parliament’s press gallery. She joined NZME in 2022 and became a Newstalk ZB political reporter in late 2024, with a keen interest in public service agency reform and government spending.