MBIE chief executive Nic Blakeley has told Parliament's Privileges Committee that the ministry "got things wrong" when it failed to tell MPs a $35 million biometric IT project had been cancelled. The project, known as the Biometric Capability Update (BCU), was axed after costs ballooned beyond its original budget. RNZ

The issue goes back to March, when MBIE appeared before Parliament's Education and Workforce Committee — a cross-bench group of MPs that scrutinises government agencies. MBIE told the committee there was no public review of the BCU project's progress. By that point, the project had already been cancelled. In June, Speaker Gerry Brownlee referred the failure to disclose the cancellation to the Privileges Committee, a powerful parliamentary body that investigates whether MPs' or committees' rights have been breached, after Labour's Phil Twyford and the committee itself raised the matter. RNZ

Blakeley told the committee the ministry had a "genuinely held belief" that Budget and commercial sensitivities limited what could be said publicly. At the time, MBIE was still negotiating final payments with NEC, the Japanese technology firm contracted to deliver the system. But Blakeley conceded those constraints did not stop the ministry from using parliamentary mechanisms to share the information privately. He acknowledged MBIE could have requested a hearing with the public removed — sometimes called a "secret hearing" — to tell the committee about the cancellation while protecting commercial negotiations. He accepted that not doing so was a mistake. RNZ

Blakeley said the decision not to disclose the cancellation was not an "active decision" but rather an understanding between himself and then-Immigration New Zealand head Alison McDonald that commercial sensitivities limited what they could say. RNZ

McDonald, who has since retired, gave evidence to the committee by video link from the UK. Her account differed from Blakeley's. McDonald told MPs that in her mind the BCU programme "had not stopped" — a striking statement given the project had been terminated and final-payment negotiations were underway. The exchange revealed a gap between how the two senior officials understood the status and obligations of the programme. RNZ

Privileges Committee chair Chris Bishop was blunt. He told Blakeley the situation "beggars belief" and described the BCU project itself as "a disaster." The language reflects frustration among committee members that a government agency appeared to fall short of its basic obligation to be straightforward with Parliament. RNZ

The scale of the problems with the BCU project was set out in a review MBIE published on its website in April. The review found the initiative was "largely treated as an IT project rather than a business-driven" one — a framing that typically signals weak strategic ownership from the departments that would actually use the system, and an over-reliance on technology to solve operational problems. MBIE

That review also confirmed the financial picture. Estimated costs for the BCU were expected to exceed the $35 million figure, reinforcing the fiscal stakes that went undisclosed to the Education and Workforce Committee in March. MBIE

For those working around Parliament and the public service, the episode raises pointed questions about how agencies balance commercial confidentiality against their duty to be forthcoming with select committees. The Privileges Committee process itself is the mechanism for testing that balance. Blakeley's concession that a confidential hearing was available, and that MBIE failed to use it, is the crux of the matter. The machinery exists for agencies to disclose sensitive information without compromising negotiations; MBIE did not deploy it, and the ministry's chief executive has now conceded that was wrong.

McDonald's evidence adds a further complication. If two officials at that level held genuinely different understandings of whether a programme had stopped, it suggests weak internal communication at precisely the moment when accountability to Parliament was at stake. Bishop's description of the project as a disaster, and of the disclosure failure as begging belief, signals that the committee is unlikely to treat the matter as a minor administrative oversight.

The broader context here is the long-standing expectation in the Wellington system that select committees can compel and receive truthful information from government departments. When an agency withholds a material fact from a committee, the commercial-sensitivity defence is available, but it is not absolute. The Privileges Committee polices that boundary, and MPs on all sides have shown little patience for agencies that fall short. The BCU case will test what consequences, if any, follow from a chief executive's admission of error.