The Government is spending $90.5m to upgrade the computer systems at Immigration New Zealand - which is hoped to improve efficiency and reduce operating costs by $12.1m over 15 years.
Cabinet approved the upgrade last October, but it has not been publicly announced because the contract negotiations were still being finalised.
The spending is revealed in the Department of Labour's briefing report to incoming ministers, released today.
The upgrade will introduce the Immigration Global Management System over five years, replacing the ageing system it has at the moment.
"IGMS will replace core immigration information and communications technology systems in all aspects of the immigration process, including online contacts for migrants, visa issue, border crossing and settlement," the BIM said.
"IGMS will enable better immigration services to be provided at lower cost by replacing an expensive, inflexible system with a new operating model."
It is hoped the new system will help attract and retain skilled migrants and improve border security.
The BIM also outlines how the department planned to cope with reduced funding in the next four years, including the Cabinet-enforced annual reduction by $7m in funding from 2012/13.
The department aims to save 1 per cent a year in administration and support costs.
The department, as well as Treasury, recommended that the Government consider amending the settings to NZ Superannuation to encourage older people to stay in the workforce for longer.
It noted that in 2061, one quarter of the population will be over 65 years old or older, compared with only 13 per cent last year.
"Building opportunities for all working-age people to be in employment would help manage [labour force] supply constraints," the report said.
"The Department's analysis suggests that increasing the participation rates of older workers would make a much bigger contribution to increasing labour supply than would expanding immigration."