Source: New Zealand Government
Legislation to halt excessive rates increases and ensure councils’ focus to be on fixing the basics and keeping rates affordable has passed its first reading in Parliament today, Local Government Minister Simon Watts says.
Under the Local Government (Rates Capping) Amendment Bill, councils will be required to keep annual rates increases within a target range of 2-4 per cent.
“Steep and unexpected rates increases add pressure to household budgets at a time many New Zealanders are already feeling the squeeze,” Mr Watts says.
“This Government is serious about bringing stability and certainty to rates increases for New Zealanders and this Bill clearly demonstrates that drive.
“We are committed to refocusing councils on delivering core services, keeping rates down for ratepayers, and putting more money back into Kiwi pockets.
“Nice-to-haves should never come at the expense of delivering the basics and the days of double-digit yearly rates increases are coming to an end.”
Councils will be required to consider the cap range from 1 July 2027 when preparing their long-term plans, and the rates caps will take full effect from 1 July 2029.
The Finance and Expenditure Committee will now consider the Bill.
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/2026/09/01/rates-capping-bill-passes-first-reading/