Passport revenues plummet in Covid-19 world

As New Zealanders sit on expired passports now international travel is off-limits, the department tasked with running the system is facing declining revenue in the tens of millions and trying to model future demand in an environment where uncertainty is the only certain fact

Given the reputation of many New Zealanders as enthusiastic globe-hoppers, the country’s passport holds a special place in Kiwi hearts.

So too in recent years has the system we must go through to get one. In 2018, the passport application and renewal process received the second-highest satisfaction rating from New Zealanders in an annual survey conducted by the Public Service Commission.

The passport also holds a certain esteem abroad: in the latest edition of the Henley Passport Index, which ranks passports based on the number of countries their holders can access without an advance visa, New Zealand sits in joint seventh with visa-free access to 185 destinations.

Yet with international travel declining precipitously thanks to the Covid-19 pandemic, and hopes of a travel bubble with Australia or the Pacific seeming as distant as ever, many Kiwis are understandably choosing to let expired passports gather dust on the shelf in lieu of rushing for a replacement.

The Department of Internal Affairs, which administers the country’s passport service, says there are 410,000 “outstanding renewals” for passports which normally would not have been allowed to lapse by their holders.

That large number, coupled with fears a surge of applications could stretch resources when the border does reopen, has led the department to send “courtesy emails” to New Zealanders with expired passports prompting them to renew.

Maria Robertson, DIA’s deputy chief executive for service delivery and operations, told Newsroom there had been an uptick in applications following the email campaign, which was in part about reminding New Zealanders of the importance of passports as an identity document.

“We spent a lot of time in that first month or so really going above and beyond to get passports into people’s hands to catch flights and leave the country as their borders were closing around them.”

“All of us essentially rely on our identity credentials at certain times, even if we’re not travelling,” Robertson said, noting her 16-year-old son had needed his passport to sit his learner’s licence test.

The message was also about ensuring those who did want to travel as soon as possible were not held up if DIA was “inundated with demand” from hundreds of thousands of applicants.

The department’s passports workload had fluctuated dramatically, with an initial spike in applications from overseas New Zealanders who wanted to return home as countries began to close their borders.

“We spent a lot of time in that first month or so really going above and beyond to get passports into people’s hands to catch flights and leave the country as their borders were closing around them.”

When demand for passports dropped by about 87 percent at the height of the nationwide Covid-19 lockdown last year, Robertson said the DIA workforce had provided support for the Electoral Commission and other public sector agencies.

Since then, there had been a focus on ensuring staff had multi-disciplinary skills so they could work across a range of services when the pandemic led to spikes or plummets in demand, while the department had focused on its permanent employees and reduced its use of fixed-term and temporary staff.

While there had been significantly reduced demand for passports, Robertson said citizenship applications had increased slightly, while births, deaths and marriages queries had remained at pre-Covid levels – albeit with the issuing of marriage certificates becoming problematic during lockdowns.

‘Passport revenue risk’ outlined

The drop in applications and associated fees has led to what DIA called a “passport revenue risk” in its 2019/20 annual report, with a drop of nearly $28 million for that financial year.

The department has predicted passport revenue will halve again in 2020/21, from $91m to $44.5m, and said it was “uncertain when this revenue stream will recover, as it relies on factors outside [our] control…such as border restriction decreases, resumption of international travel, and willingness of passport holders to travel”.

Robertson said DIA had about four modelling scenarios it was working on constantly to consider the flow-on effects for passport applications, based on the extent of borders reopening and the demand for international travel.

She was confident the department would not be overwhelmed by demand under any scenario, while it had already been preparing for a decline in passport fees due to the 2015 decision to double the documents’ validity to 10 years.

However, Covid-19 had both brought that drop forward and exacerbated the shape of the downwards curve.

Government ministers were well aware of the drop in revenue, she said, with regular discussions about the fiscal impact of the pandemic across the public service.

Robertson said she did not know whether the declining revenue would factor into the three-yearly review of passport fees set to take place in November, with that decision in the Government’s hands and DIA set to discuss the issue with Internal Affairs Minister Jan Tinetti.

In a statement, Tinetti told Newsroom she was “watching this issue closely, and will continue to monitor as it develops”, adding: “Any decisions on funding are subject to future budget processes.”