Cabinet papers showed the cost of obtaining a passport needed to increase to $404 by 2021 if no Government money was spent to lower the cost, Radio New Zealand said.
Last month ministers voted in favour of increasing passports' lifespan from five to ten years.
The Treasury was opposed to the suggested increase from $135, which is what passports cost currently, to $180 because the amount would not cover the cost of producing the passports.
Initially a fee of $225 was agreed on but after Internal Affairs Minister Peter 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, Radio New Zealand reported.
Mr Dunne called passports a "common good" and said Government spending was warranted to keep passports affordable.
"Well, it's something that we are very keen for New Zealanders to have and to enjoy. Significant numbers of New Zealanders use their passports to travel and so they should be encouraged to do so.
"My view, very strongly, was that if we were going to retain the cost recovery principle in full we would make that cost prohibitive for a number of people," Mr Dunne told Radio New Zealand.
