Local Government Minister Simon Watts says a new policy to control rates rises would be taken to Cabinet by the end of the year.
Photo: RNZ / Samuel Rillstone
As councils prepare for a surge of applications for rates help this year, one local government expert is calling for a shakeup.
A big increase in rates charged by many councils around the country has put pressure on households.
On average, councils have announced an increase of 8.4 percent for the coming year.
Auckland and Christchurch City were increasing by 5.8 percent and 6.6 percent respectively. Hamilton City was lifting by 15.5 percent and Wellington City by 12 percent.
The government is considering options to control rates rises, including putting a cap on how much local councils can put them up each year.
Local Government Minister Simon Watts said there would be a policy taken to Cabinet before Christmas.
The rates rebate scheme was increased this year to allow people over 65 with household income up to $45,000 to access the full rebate. The maximum rebate for the scheme would also increase from $790 to $805.
Those under 65 had a lower income limit before the amount they could claim reduced, of $32,210.
Auckland Council rates, valuations and data manager Rhonwen Heath said the council had a range of options it offered to people concerned about paying rates, including payment options and postponements as well as the rebate scheme.
“Our postponement policy is geared at being an attainable solution for ratepayers – to apply, residential property owners need to have 80 percent equity in their property and live there.”
She said 14,800 households were approved for a rates rebate in the 2024/25 rating year. In the previous year, it was 16,000.
“This year [since 1 July] there are 3700 ratepayers receiving a rebate. With the increased rates rebate threshold, we expect a reasonable increase in ratepayers who receive a rebate this year.”
The council estimated about 30,000 households would be eligible.
“There were 684 rates accounts with postponements as at 30 June 2025. These continue year-on-year and 19 new postponements have occurred since July 2025. In 2023/2024, 645 were on postponement. “
She said 3.3 percent of customers, or 20,848 rates accounts, had overdue rates from the most recent year.
Wellington Council said, as of July, it had received about 400 rates rebate applications. There were 1704 in total in the 2024/25 year.
“For payment plans, we’ve established 335 plans since July 2025, compared to 440 at the same time last year. For accounts in arrears from the previous rating year, we’ve issued first notices to all parties with a registered interest on the property title. We anticipate a further increase in payment plan requests during September and October, ahead of final demand notices scheduled for November 2025.”
Christchurch City Council head of finance Bruce Moher said his council granted about 11,120 rates rebates in the 20245/2025 year.
Some smaller councils had large proportions of ratepayers claiming.
Whangārei mayor Vince Cocurullo said at the end of August, his council had processed 14 percent more rebate applications than a year earlier, and the amount claimed was 23 percent more.
‘Pull its socks up’
Andy Asquith
Photo: Supplied / Andy Asquith
Andy Asquith, industry fellow in the University of Technology Sydney institute for public policy and governance said New Zealand needed another review of council funding.
In 2006, the government commissioned an independent inquiry into local council rates, which led to an almost-300 page report that made recommendations around the use of rating tools, non-rates funding mechanisms and the sustainability and affordability of rates.
But Asquith said the government needed to get away from its approach to local councils being that they were incompetent, inefficient and irrelevant.
“There needs to be a complete change of tack from the central government in terms of local government full stop. Central government needs to start talking up local government. At the same time, local government needs to pull its socks up.”
He said councils could be able to cut costs by pooling resources and working together, but that would only last as long as the right people were in place within each council.
Sharing GST collected from new builds could work, he said. “The problem with that is it means central government giving up some of its pot of gold and they’re not likely to do that.”
He said, judging by past experience in the United Kingdom, if the government did opt for rate capping, a small number of councils were likely to be able to identify and expose loopholes in the legalisation.
Asquith said councils did not do a good job of connecting with the public and demonstrating what they did with their money and how important the services were.
“On a daily basis, we interact with local government and national government multiple times, but with local government far more. But we don’t understand this.”
He said council could overcome the impression that they were “useless” by introducing measures to improve the quality of candidates, such as a test before they stood.
“The idea that lots of people are standing for council on a platform of saving the hospital, saving the post office, cutting rates, and addressing bureaucracy … How many things can we actually do from that list? The answer is none. So you make sure that people standing for council at the very least understand what a council is, what a council’s function is, and what a councillor’s role is. Then once they get elected, you put together a national programme of relevant education, training and development they have to do … if you take any large public company in New Zealand and look at the board of directors, they’ve got to by law have the appropriate skills to do that role. So why do we let individuals take responsibility for billions of dollars of assets on council?”
Massey Univeristy senior property lecturer Arshad Javed said the criteria for the rates rebate scheme was still very strict.
“At present, households earning above $51,562 do not qualify, which rules out a significant proportion of ratepayers. This means the scheme only reaches a narrow group of households who meet the income and circumstances test, and uptake is unlikely to grow unless the government adjusts the threshold or eligibility rules.
“In reality, households don’t ‘adjust’ to rising rates bills, they either qualify and receive some relief, or they don’t qualify and are left to absorb the costs.”
Local Government NZ president Sam Broughton.
Photo: RNZ / Nathan Mckinnon
Local Government NZ president Sam Broughton said councils needed more funding tools.
“If you just cap rates, you create a deficit for the next generation. Today’s councils are playing catch up on historic underinvestment and investing for tomorrow.
“Capping rates will also cost ratepayers more. Restricting local government’s ability to use rates will further impact council credit ratings. This means councils, and therefore ratepayers, will end up paying more on interest for the same amount of debt.
“If the government shared a percentage of GST collected from new housing developments with the council that issued the building consent, this would help cover new infrastructure costs like roads, water and wastewater infrastructure.
“Councils are responsible for about a third of all public infrastructure investment in New Zealand, and are now planning to spend $77.2 billion on capital expenditure programmes over the next 10 years. That’s significantly higher than past councils, because today’s councils are playing catch up.”
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