Progress On Rates Reform - But Only Half The Picture

Federated Farmers is welcoming the Government’s moves to rein in soaring council rates but says key elements are missing from the reform bill announced yesterday.

"The proposed legislation rightly refocuses councils on core services - roads, water, rubbish, and basic infrastructure - something we’ve long called for," Federated Farmers local government spokesperson Sandra Faulkner says.

"New financial performance measures, benchmarking and more regular public reporting should help drive greater transparency and accountability."

But Faulkner says while the Local Government (Systems Improvements) Amendment Bill also contains some regulatory relief tweaks, it fails to address a major pressure point: the constant loading of councils with new, unfunded mandates.

There’s also no sign of ditching the 30% cap on uniform annual charges, or direction to councils they should use this tool more to distribute costs more fairly, instead of relying on property value-based rates that hit farmers hard.

"Federated Farmers is in no doubt that many councils need to show more financial discipline.

"Data shows the average dairy farmer’s rates in 2024/25 were $23,000, a 25% increase in the last five years. Rates for sheep and beef farms average $19,000, a 35% increase since 2020/21.

"These are huge amounts to come out of farmers’ budgets year after year and our rural families are really feeling the pressure," Faulkner says.

Local Government Minister Simon Watt says the Government is working at pace to develop a rates cap model, expected later this year.

"Federated Farmers supports the idea - but it has to be well-designed," Faulkner says.

"A lot of careful thought will be needed to get this right. There needs to be off-ramps for councils facing legitimate cost pressures for essential infrastructure like roads.

"Councils still need to be well-funded in the interests of maintaining robust infrastructure."

She also warns a cap could affect Local Government Funding Authority credit ratings, potentially driving up borrowing costs for councils.

"The last thing councils need are higher debt interest costs from LGFA, the principal lender at competitive rates to local authorities."

Faulkner says the bill and upcoming select committee hearings are a good chance to finally tackle bigger questions about council costs and funding.

"Minister Watts has ruled out new taxes or revenue tools for councils, with the Government saying there’s still scope to get better value from current rates. But that ignores half the equation.

"The bill acknowledges council rates rises are being driven by rising council costs, particularly for critical infrastructure."

The Federated Farmers ‘Restoring Confidence in Local Decision-Making’ blueprint calls for local road and bridge maintenance and renewal costs to be funded 90% from road user charges, rather than the current situation where ratepayers fork out just under 50% of these costs.

"And we think there should be local referendums for any large council commercial projects - such as stadiums and conference centres - if they cost more than $500 per rateable property."

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