Internal Affairs Minister Peter Dunne is defending the decision to go against Treasury advice on passport fees, saying the cost should be affordable.
Last month, Cabinet approved doubling the lifespan of passports from the present five years, and increasing the fee from $135 to $180.
Peter Dunne Photo: RNZ / Diego Opatowski
But Cabinet papers released to Radio New Zealand show the Government will need to put up an extra $200 million, or double the cost of passports to about $400, from 2021.
The papers show Treasury was opposed to setting the fee as low as $180 because it did not cover the costs of producing the passports.
The Department of Internal Affairs (DIA) papers include Treasury's comments that "ministers are being asked to take a decision that is neither financially sustainable nor transparent".
The Treasury told the Department that in six years time passport fees would need to go up to $404 or the DIA would need extra capital of $218 million over six years from July 2021.
Internal Affairs Minister Peter Dunne referred to passports as a "public good".
Initially Ministers had agreed on a fee of $225 but after Mr Dunne met with Associate Minister Steven Joyce in April, it was decided that a fee of $180 plus a capital injection of $20 million would cover costs until July 2018.
Treasury said the passport fee would need to be $404 from 2021 unless extra capital was put in. Photo: 123rf
After that date the passport fund would fall rapidly into deficit for the second half of the 10 year period, requiring either a fee increase, or a cash injection from the Crown.
Fixed costs
Although fewer passports will be issued each year once 10-year passports are the norm, the Department of Internal Affairs expects many of the costs to stay the same.
"The technology that we use to produce the passport is essentially the same technology whether we're doing 290,000 passports a year or 620,000 passports a year," said deputy chief executive Maria Robertson.
"We can't actually scale those technologies according to our volumes."
The department believes the number is likely to fall by 60 percent.
'Balanced approach'
Mr Dunne is defending the decision to keep things affordable by essentially subsidising the passport.
Listen to Peter Dunne
He acknowledged Treasury wanted a full recovery of the costs but there was no point in having 10-year passports if New Zealanders could not afford them.
"For a lot of people [the cost] might be the difference between making the decision to travel or not to travel and I don't think that's a reasonable consideration in the circumstances," he told Morning Report .
"I think we've struck a balanced approach which recognises the public wish to move back to a 10-year passport."
Mr Dunne said the fee would not necessarily go up to $400 in six years, as technology was likely to evolve.
The minister thought Cabinet reached a "fair and balanced" decision. He would be reporting back to Cabinet later this year about the funding structure and the implications for the DIA.
The 10-year passports are expected to take effect at end of this year.