Source: Radio New Zealand
The government’s long-awaited rates cap will be a variable target band, and would be enforced by a new regulator.
Likely starting with minimum increases of two percent and a maximum of four percent, the cap would take effect from 1 January 2027.
It was not clear from the initial written statement how often the target might change, or exactly how it would be calculated, only that this could include “indicators like inflation at the lower end and GDP growth at the higher end”.
Local Government Minister Simon Watts said councils will need to seek permission from a new regulator to go above the maximum, and that permission would only be granted in “extreme” circumstances.
Water charges and other non-rates revenue will be exempt from the target range, but all general rates, targeted rates and uniform annual charges would be subject to the limits.
Watts indicated the ranges would likely start at between 2 percent and 4 percent per capita, per year, based on analysis.
“This means rates increases would be limited to a maximum of 4 percent,” he said.
Local Government Minister Simon Watts RNZ/Mark Papalii
Consultation on the changes announced at the post-Cabinet briefing on Monday opened immediately, and set to close in February 2026 with the legislation expecting to be passed by the end of that year.
The target would begin from 2027, with the “full regulatory model” in place by 1 July 2029.
The announcement follows last week’s unveiling of the government’s plan to abolish regional councillors, replacing them with panels of mayors from city and district councils.
In a statement, Watts said rates increases that recently had been in double digits was “unsustainable and is only adding to the cost of living for many Kiwis”.
“Ratepayers deserve councils that live within their means, focus on the basics and are accountable to their community. The Government’s decision to introduce a cap on rates will support that ambition and protect local government’s social license for the long term,” he said.
“A minimum increase is necessary so councils can continue to provide essential services like rubbish collection, council roads maintenance and the management of parks and libraries.
“From 2027, councils will be required to consider the impact of rates caps on their long-term plans and report on areas of financial performance, like the cost of wages and salaries, council rates as a percentage of local house prices and estimates of local infrastructure deficits.
“The full regulatory model will take effect by 2029. However, officials will be monitoring rates rises nationwide as soon as the legislation is enacted. Where councils propose increases beyond the proposed cap, this may present grounds for intervention under the Local Government Act.”
He said councils should not wait for the full enactment of the rates capping model before controlling rates increases for their constituents.
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– Published by EveningReport.nz and AsiaPacificReport.nz, see: MIL OSI in partnership with Radio New Zealand
