A "struggling" system means Australia's immigration authorities have been keeping Kiwis in detention centres for too long when their visas have been cancelled.
Inadequate case management for people whose visas have been cancelled under section 501 of Australia's Migration Act has led to a system struggling to cope with the volume of people in detention centres, a report from the Commonwealth Ombudsman said.
The majority of those being held for "unnecessarily prolonged" periods of time were New Zealanders, Ombudsman Colin Neave said.
The section allows or sometimes requires the cancellation of visas of people who have been convicted of certain offences or those sentenced to more than 12 months imprisonment.
A person who has had their visa cancelled may then apply to have the cancellation of their visa revoked so they may remain in Australia.
When the section was amended in 2014, the number of visas being cancelled leaped from 76 in 2013-14, to 983 is 2015-16.
The department's aim is to cancel visas well before someone's estimated date of release from prison so that any revocation process can be finalised while in prison.
"To date the department has failed to achieve this," Neave said in one of two reports.
The delays also undermine the department's aim to give primary consideration to the minor children of those detained.
One of the reports considered a direction (Direction 63) from the Minister for Immigration and Border Protection relating to Bridging E visas.
The direction says Bridging E visa holders who have been found guilty of engaging in criminal behaviour should expect to be denied the privilege of continuing to hold a Bridging E visa while they await the resolution of their immigrant status.
The report investigated examples of people who were not prioritised for release from detention after their criminal charges were withdrawn or otherwise resolved.
"The ongoing detention of many individuals in this cohort is inappropriate and has negatively impacted upon their mental health," Neave said.
"To deny a person the liberty to live freely in the community based on nothing more than an allegation that leads to a charge that is subsequently withdrawn raises the question of whether the department has acted prematurely by cancelling a visa."
In one case study, a Year 12 student accused of an unlawful sexual connection had his Bridging visa cancelled. The charges against him were withdrawn on October 20, 2015, but he was not released from detention until September 13 the next year.
Another case study showed one man had his Bridging visa cancelled following a conviction for shoplifting. He was not given a custodial sentence, yet he was still in immigration detention more than 12 months after the charges had been resolved.
"While it would seem reasonable that the resolution of the charge that led to a person being re-detained would prompt a review of their circumstances, this investigation has established that this does not happen," Neave said.
"In reality, people in this situation are dependent on the capacity of a poorly supported case management and escalation framework to adequately review the circumstances of their individual case."
He said the release for these people depended on whether they happened to fall within the scope of the department's wider priorities.
He said the department had indicated things had improved since the investigation.
The Ombudsman will re-examine the situation "sometime in the future" to see if the improvements had actually been made.