Zero Rates Can Lead To Long Term Pain For Ratepayers - Former Mayors

Friday, 12 September 2025, 3:50 pm
Article: David Hill - Local Democracy Reporter

Two former North Canterbury mayors say rates capping and zero rate rises could leave ratepayers forking out more in the long run. 

David Ayers and Winton Dalley served as mayors of Waimakariri and Hurunui respectively from 2010 to 2019, leading their districts through earthquake recoveries and major infrastructure upgrades. 

The Government has been exploring options for rates capping, while local government election candidates have been pledging to cap rates and there is even talk of zero percent rate rises. 

‘‘The problem with zero rate rises is inflation will eat away at your ability to maintain council infrastructure,’’ Mr Ayers said. 

‘‘You get behind and council services will start to suffer, and while people can say they will just be more efficient, they need to identify what efficiencies will save a lot of rates.’’ 

Councils might be able to keep rates under say 5% for several years by deferring major projects, spreading out loan repayments or deferring depreciation. 

But eventually infrastructure needs to be replaced, or a natural disaster strikes like an earthquake, Mr Ayers said. 

The Government has told councils to cut out the nice-to-haves and focus on core services. 

‘‘One of the problems is that one person’s nice-to-haves is another person’s essential service,’’ Mr Ayers said. 

Mr Dalley said during is first term as a councillor, several of his colleagues wanted to present a zero rate increase to the community. 

‘‘I spoke out against it. At the time inflation was 4%, so I said they were actually talking about a 4% rate reduction.’’ 

In the end the council went with a rate rise in line with inflation. Mr Dalley said Consumer Price Index (CPI) is not a good measure of council costs, as bitumen (for roading), energy and construction cost increases tend to be higher than CPI. 

‘‘I understand the Government’s intention to control costs, we all need to control costs, but to cap rates without making other funding options available is just going to hamstring councils and lead to infrastructure deficits.’’ 

Clutha Mayor Bryan Cadogan is retiring in October after five terms as mayor. When he was first elected he came in with a promise of capping rates at 4% and maintained it for 12 years. 

‘‘I’m the rates cap king for New Zealand. It worked an absolute treat. 

‘‘It was my vision which brought it in, my belligerence which maintained it and my ignorance which kept it going for two years longer than it should have.’’ 

The council stopped funding the ‘‘nice-to-haves’’, like swimming pools, sports and community facilities, Mr Cadogan said. 

‘‘We were in competition for our young people with Central Otago, Oamaru and further afield, even Rangiora and Australia ‘‘Our young people voted with their feet and left.’’

The population dropped from 18,000 to 16,000 and there were 1000 job vacancies which could not be filled. 

This year the average rate rise was 16.4% - or 24% in urban areas, and debt has risen from zero to $146m, due mainly to investment in water services infrastructure. 

Young people have returned with the return of the nice-to-haves investment, but the problems remain. Clutha has the third largest roading network and the third largest reticulation network spread across 12 towns. 

Several of the towns have less than 300 people but face multi-million-dollar upgrades to water services. 

Local Government Minister Simon Watts said he planned to take a proposal to cap council rates to Cabinet by Christmas.

‘‘What ratepayers are saying is they can't afford to continually see the degree of rate increases that are well above inflation and well above population growth,’’ he said. 

Mr Watts said it would be based on an Australian model, which saw local government rates capped at three percent in Victoria and between 3.6% and 5.1% in New South Wales. 

-LDR is local body journalism co-funded by RNZ and NZ On Air.

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