Council Leaders Question Whether Rates Capping Is Viable

Tuesday, 16 September 2025, 3:54 pm
Article: David Hill - Local Democracy Reporter

North Canterbury council leaders say they support the intent behind rates capping, but question whether it’s viable. 

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

But North Canterbury council leaders said until they saw the detail, it was difficult to know how a rates cap would impact them. 

Hurunui Mayor Marie Black said councils were restricted to rates, borrowing and external funding (including Government) as sources of revenue. 

But councils were not all equal in what services they provide to their communities, she said. 

‘‘We have five medical centres in our district and four are managed through a targeted rate. 

‘‘It is a sense of pride for those communities that they can provide for their own health care provisions, but without the ability for us to raise a targeted rate, how would we pay for it?’’ 

Hurunui has one of the lowest average rate rises this year at 3.37% but has had several double digit rate rises over the last decade while it upgraded its waters services infrastructure. 

Waimakariri District Council chief executive Jeff Millward said he was concerned at the risk of ‘‘perverse outcomes’’. 

‘‘Although it may limit expenditure, it could provide a higher bench mark than what a council may otherwise restrict itself to.’’ 

Waimakariri’s average rate rise this year was 4.98%, one of the lowest in the country. ‘

‘Our council listens to our community and sets rates through consultation with the community around the balance of needs and ‘wants',’’ Mr Millward said. 

‘‘We have never set our rates without first consulting with the community.’’ 

Kaikōura District Council chief executive Will Doughty said rates capping could have ‘‘serious implications’’ depending on how it was applied. 

‘‘The Government needs to work through what the potential ramifications are, because there could be some quite perverse outcomes. But it depends on the detail. 

‘‘We really should be discussing, who should be making the decision - the Government or the local community? 

‘‘Councils are required to consult on their Long Term Plans and annual plans, so if it’s something the community wants and is happy to support, should the Government be the ones restricting that?’’ 

Mr Doughty said depending on what restrictions were imposed, rates capping limits could impact on a council’s ability to invest in new infrastructure, maintain assets or provide facilities communities want.

Consumer Price Index (CPI) inflation was not a good measure of council costs, as cost increases for construction materials, bitumen and other materials were generally much higher compared to groceries, he said. 

In recent years Kaikōura has invested in roading and footpaths due to community demand. 

This year’s average rate rise is 8.94%. Mr Watts said the Government’s proposed model was likely to 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. 

‘‘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. 

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

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