Rates Cap Risks Burdening Business Owners as Councils Seek New Revenue Streams

The New Zealand government has announced that council rates will be capped at 4% from July 2029, with a target of 2-4% per capita from July 2027. The cap is intended to put a brake on excessive increases and save the average household around $134 per year.

However, critics argue that this may not be enough to address the growing affordability gap between rates and average hourly earnings, which have risen by 50% over the past decade. Councils are also facing significant costs due to inflation in areas such as bridges (up 38%), sewerage (30%), roads and water (27%), and insurance premiums (12-30%).

Gore Mayor Ben Bell warned that the new RMA system and emergency management changes will cost $860 million nationally, on top of debt servicing costs. He noted that a hard revenue ceiling may force councils to shift where the money comes from.