larknz: A good reason not to provide any more information than absolutely necessary. I certainly don't give them my passport number.
As our Narnian friend says above, passport information is required and sent to many immigration and document check systems, its a requirement of international travel. Immigration officers will also check your passport against 6-7 different systems both within New Zealand and internationally. Your passport is your permission by the New Zealand government to travel with the rights of a citizen, every e-gate, biometric scanner, or foreign airport you travel in, will send your passport details to other systems.
The days of only checking your face & signature and stamping your passport have been over for a decade.