Source: Public Service Association Te Pūkenga Here Tikanga Mahi
- New report shows Councils lose up to $5.2 billion in revenue by 2034
The Government’s rates capping proposals will see councils lose up to $5.2 billion in revenue by 2034 according to a new report released in Christchurch today by the union for local Government, the PSA.
As a consequence of this shortfall, local communities around New Zealand can expect to see increasing privatisation of important services like libraries and pools being sold off to the highest bidder.
“The PSA is calling on the Minister for Local Government Simon Watts to guarantee that no libraries, pools or other community facilities will be closed as a result of rates capping. The reality is he can’t given this guarantee because this is exactly what will happen, Public Service Association Te Pūkenga Here Tikanga Mahi National Secretary, Fleur Fitzsimons, said.
“Rates capping is bad policy and creates a false economy that do not meet the needs of local communities and businesses who will be left to bear the very real costs.”
The report – Who Pays for Rates Caps? Shifting costs to communities and future generations uses economic modelling and international evidence on rates caps to demonstrate how they will impact local communities and create huge financial pressure for local government.
Modelling in the report shows the economic impact of rates capping for councils will be a loss of revenue of between $1.8 billion and $5.2 billion over the current Long-Term Plan period (to 2034), depending on how quickly they move to comply with the new rules.
“The international evidence shows that under rates capping, councils take on more debt, introduce and increase service charges and defer essential infrastructure maintenance. Smaller and rural councils are the worst affected.
“Rates caps don’t help with cost of living. Instead, the cuts to council revenue will saddle ratepayers with increased user charges, reduced services, more privatisation, deteriorating infrastructure and massive council borrowing costs,” Fitzsimons said.
“Council workers will pay through lower wages and job insecurity. Future generations will pay through lost libraries and pools, deferred maintenance, reduced resilience to climate change and increased debt.
“Rates caps are also an attack on local democracy. They constrain the choices councils can make for their communities. They also undermine councils’ ability to meet their obligations under Te Tiriti o Waitangi,
“The next Government needs to cancel plans for rates capping and commit to developing sustainable funding arrangements for local government through establishing a Royal Commission to make recommendations on the role and functions of local government and how they should be funded,” Fitzsimons said.
Read the full report here: https://content.app-us1.com/2g9OXD/2026/10/14/71a3b84e-6786-422f-97de-04d32607b590.pdf
Launch event details
Media are welcome to attend an in-person launch event at 5:00pm on Thursday, 22 October (tonight) at 1st Floor, Iwikau 93 Cambridge Terrace, Christchurch Central.
Launch event speaker: Campbell Barry
The PSA is delighted to welcome Campbell Barry as a speaker at the event.
Campbell has more than 15 years’ experience in local government, including six years as Mayor of Lower Hutt and as Vice President of Local Government New Zealand (LGNZ).
As LGNZ Vice President, Campbell worked with councils throughout New Zealand on the issues shaping the sector, including local government funding, rates pressures, infrastructure investment, reform and the relationship with central government. He brings both a national perspective and firsthand experience of the realities councils face when trying to balance rising costs, ageing infrastructure and community expectations.
Campbell is now Head of Local Government and Partnerships at Agite, where he works with councils and other organisations on governance, strategy, reform and stakeholder engagement.
Notes: How the impact on councils was calculated
Before Parliament rose for the election, the coalition Government introduced a bill to cap rate increases. The Bill passed its first reading with support from the coalition Government, and Labour.
The Government’s Local Government (Rates Capping) Amendment Bill would create a range for annual property rates increases that councils must abide by. The initial range is set at 2%-4%, reviewable every six years. Exemptions are allowed in extreme cases.
Councils are encouraged to meet this target range from 1 July 2027 and, if the legislation passes, will be required to do so from 1 July 2029. Current Long-Term Plans run until 2034.
Modelling approach
Using data from the Long-Term Plans of the 25 largest councils by population with current Long-Term Plans extending to 2034, we calculated the effects of a 4% rates cap on those councils.
These 25 councils represent 80% of New Zealand’s population. We compared projected rates increases and revenue with two alternative scenarios where the councils replace any planned rates increases of greater than 4% with increases of exactly 4%, either from 1 July 2027 or from 1 July 2029.
Most councils’ rates increase projections reduce over time, from an average of over 7% in 2027/28 to 4.0% in 2033/34. This, and compounding effects, means that the year councils begin to comply with the rates cap has a significant impact on how much the cap affects the councils’ revenue.
2027 scenario
Under the 2027 scenario, over the seven years to 2034, the councils would bring in $4.2 billion less rates revenue than currently planned. Extending this to the councils not analysed, we estimate all councils would lose a combined $5.2 billion in revenue over the seven-year period.
2029 scenario
Under the 2029 scenario, over the five years to 2034, the councils would bring in $1.4 billion less rates revenue than currently planned. Extending this to the councils not analysed, we estimate all councils would lose a combined $1.8 billion in revenue over the five-year period.
The Public Service Association Te Pūkenga Here Tikanga Mahi is Aotearoa New Zealand’s largest trade union, representing and supporting more than 95,000 workers across central government, state-owned enterprises, local councils, health boards and community groups.