If implemented, the rates cap would not come into force until in 2028.<\/p>\n
With annual rates increases of between 5% and 11% forecast between 2028 and 2034, a cap could have a big impact on Tauranga ratepayers\u2019 bills.<\/p>\n
Public consultation<\/p>\n
The council has agreed to plan public consultation to help the community understand the ramifications of paying lower rates. <\/p>\n
Tauranga Mayor Mah\u00e9 Drysdale said the council could work towards lower rates; however, there would be consequences to cutting costs in terms of the level of services available.<\/p>\n
Tauranga Mayor Mah\u00e9 Drysdale. Photo \/ Alex Cairns<\/p>\n
Drysdale said the consultation would bring light to what the community would be open to living without and the compromises they would be willing to make to achieve the rates cap.<\/p>\n
The council\u2019s preliminary draft budget for the next year outlines four key cost drivers: rising depreciation due to significant asset growth; finance costs associated with about $112m in additional debt; operating costs for new assets; and water activity surpluses to meet Local Water Done Well legislative requirements.<\/p>\n
Drysdale said options for reducing rates included cutting planned capital expenditure; adjusting the council\u2019s water service revenue expectations; selling some council assets; and increasing the charges for using some public services and facilities.<\/p>\n
A S&P Global Ratings report noted the proposed national rates cap could tighten councils\u2019 financial flexibility, create underinvestment risks, increase reliance on debt, potentially trigger credit downgrades and leave little room to restore service cuts later. <\/p>\n
A Tauranga City Council staff report to Tuesday\u2019s meeting said the impact of low rates on council services would be ongoing as the cap would not readily enable higher spending at a later date.<\/p>\n
At the meeting, the council discussed ways to reduce the rates requirement for the $306 million civic precinct project Te Manawataki o Te Papa \u2013 a collection of new and redeveloped buildings in the CBD.<\/p>\n
The options included using surplus parking income, asset sales, and airport revenue.<\/p>\n
Tauranga City Council rates reduction options graphic.<\/p>\n
RNZ reported the council decided to prioritise use of any profit from potential asset sales to offset new debt and rates-funded interest associated with Te Manawataki o Te Papa, and to seek more philanthropic support for the project.<\/p>\n
Value for money<\/p>\n
P\u0101p\u0101moa councillor Steve Morris told SunLive he supported the rates cap as it limited the amount of new debt the council could take on for non-core infrastructure. <\/p>\n
\u201cI don\u2019t think people believe they have got value for money in the past,\u201d he said. <\/p>\n
Morris said the commission increased rates by 43% during its tenure. <\/p>\n
P\u0101p\u0101moa Councillor Steve Morris. Photo \/ George Novak<\/p>\n
\u201cThey addressed amenity, but it\u2019s debatable whether they meaningfully addressed the infrastructure deficit.<\/p>\n
\u201cCouncil will need to look inward at operational expenditure and outward in terms of services. <\/p>\n
\u201cSome cuts and increases to user-pays may not be palatable, that\u2019s why it\u2019s vital we hear from people during consultation.\u201d<\/p>\n
Legislation<\/p>\n
Watts said the rates cap would be based on a model with a target range for annual rates increases using long-term economic indicators such as inflation at the lower end, and GDP growth at the higher end. <\/p>\n
Councils would not be able to increase rates beyond the upper end of the range, unless they had permission from a regulator appointed by central government. <\/p>\n
Local Government Minister Simon Watts. Photo \/ Mark Mitchell<\/p>\n
Permission would only be granted in extreme circumstances, such as a natural disaster, and councils would need to show how they would return to the target range. <\/p>\n
The cap would apply to all sources of rates \u2013 general rates, targeted rates and uniform annual charges \u2013 but would exclude water charges and other non-rates revenue such as fees and charges.<\/p>\n
Legislation would be enacted during 2026 and would take effect on January 1, 2027.<\/p>\n
This would mark the beginning of a transitional period, enabling councils to incorporate the cap into their long-term planning.<\/p>\n
Tauranga average rates increases<\/p>\n
The gross average, net of growth and including volumetric water. As the council will begin separating volumetric water from the next Annual Plan, the average increase without water is <\/p>\n
2026: 9.9% (minus water: 10.1%)<\/p>\n
2025: 13.1% (minus water: 13.8%)<\/p>\n
2024: 6.2% (minus water: 9.1%)<\/p>\n
2023: 13.7% (minus water: 12.9%)<\/p>\n
2022: 21.5% (minus water: 20%)<\/p>\n