Source: New Zealand Government
Council rates increases will be capped at 4 per cent as the Government moves to help keep rates affordable for households and businesses, Local Government Minister Simon Watts says.
“For too long, ratepayers have been hit with steep and unexpected rates increases, adding pressure to household budgets at a time many New Zealanders are already feeling the squeeze,” Mr Watts says.
“Our Government is focused on easing cost-of-living pressures and getting councils back to basics.
“Under this legislation, councils will be required to keep annual rates increases within an initial target range of 2-4 per cent, putting a brake on excessive increases and giving ratepayers greater certainty.
“It will also sharpen the focus on delivering the services communities expect councils to get right, like fixing the potholes, collecting rubbish and running our pools and parks.
“We recognise there will be limited circumstances where councils need greater flexibility, such as recovering from a natural disaster or responding to events outside their control. Exemptions will not be granted lightly and will only be available in exceptional circumstances where there is strong justification.
“Ratepayers nationwide have been hit with median increases of 14.2 per cent and 9.2 per cent over the past two years respectively.
“This rates cap is about driving greater fiscal discipline, keeping rates affordable, and ensuring councils are focused on delivering the services ratepayers rely on.”
Councils will need to consider the target range from 1 July 2027 when preparing their long-term plans, and the caps will take full effect from 1 July 2029.
Editors’ notes:
Under the proposed rates capping system:
- Annual rates increases will remain within an initial target range of 2 to 4 per cent.
- The target range will be reviewed every six years and updated where necessary to reflect costs outside councils’ control.
- The target range includes a minimum level of rates increase to support councils to continue delivering essential services and investing in infrastructure.
- Two types of time-bound exemptions will be available:
- Exceptional circumstances: where additional rates revenue is needed to recover from events such as natural disasters that go beyond what a council can reasonably be expected to plan for.
- Prudent financial management exemption: where a council can demonstrate prudent financial management and a justified need to operate above or below the target range. Councils will be required to consult their communities before setting rates.
- Water services are excluded from the rates capping system and will continue to be regulated separately.
The legislation also establishes an independent regulator responsible for:
- Monitoring compliance with the rates capping system.
- Assessing exemption applications.
- Advising on future target ranges.
- Supporting councils through implementation and transition.
- Providing guidance to councils and reporting on how the system is operating.
Original source: https://nz.mil-osi.com/2026/08/25/government-to-cap-rates/