Masterton ratepayers and residents association president Lyn Riley described the government's proposal to cap rates as a ‘timely reminder’ for local authorities. Photo: LDR / SUPPLIED
The government's proposals to control annual local authority rates rises has met a mixed response from Wairarapa leaders.
Local Government Minister Simon Watts proposed the introduction of a banded rates cap, of between 2 and 4 percent per annum, in an announcement on Monday afternoon.
"Rates are taking up more of household bills, and some communities have faced double-digit increases year after year. This is unsustainable and is only adding to the cost of living for many Kiwis," he said.
"Analysis suggests a target range of 2 to 4 per cent per capita, per year. This means rates increases would be limited to a maximum of 4 per cent."
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The Masterton ratepayers' association had welcomed the move, while the response of the region's mayors had been cautious.
Masterton ratepayers and residents association president Lyn Riley described the proposal as a 'timely reminder' for local authorities.
"This regulated change will finally require councils to live within their means - just like the rest of us - and refocus on the 'back to basics' approach that ratepayers have been calling for over many years," she said.
"With rate increases consistently outpacing household incomes, [the] announcement serves as a timely reminder that councils must prioritise essential services, deliver genuine value for money, and be transparent about how every dollar is spent.
"It also puts strong pressure on our council to rein in non-essential projects, reduce administrative overheads, and limit discretionary spending"
Riley questioned whether the move would encourage councils to lift efficiency and find smarter ways of operating, or default to cutting frontline services.
Masterton Mayor Bex Johnson said an imposed rates cap risks restricting smaller councils from investing in their districts. Photo: LDR / SUPPLIED
"Masterton ratepayers and residents association will be watching this one closely."
South Wairarapa Mayor Fran Wilde said more detail was needed to answer important questions.
"A target range is certainly better than a hard cap but at this stage we need to know more detail, especially in terms of what the proposed process for exemptions would mean for essential infrastructure," she said.
"The Australian experience with a similar scheme has shown that too much bureaucracy in this respect can negatively impact GDP. Hopefully the Government will welcome sensible feedback."
Masterton mayor Bex Johnson sounded a note of caution, saying elected members took rates setting seriously, balancing affordability with ensuring the needs of the community were met.
"An imposed rates cap runs a serious risk of restricting smaller councils from investing in and developing their districts," she said.
"If debt-funded projects, such as new and renewed infrastructure, drive up rates then critical projects may be paused or cancelled. Overseas experience has shown that a blanket rates cap can lead to infrastructure issues as a result of maintenance spending being deferred."
Johnson said holding rates revenue to a pre-determined level could lead to reduced services as councils made trade-offs. This could increase costs for ratepayers as user fees increased.
"We look forward to giving our feedback on the Government's proposal in the coming weeks," she said.
Greater Wellington deputy chairperson and Wairarapa representative Adrienne Staples said rural communities would want to understand the impact of resource management reform first.
"Ideally, the Government should concentrate on landing its resource management reform, giving iwi, farmers, landowners, developers and lifestyle property owners as well as the local government sector, crystal clarity on where costs will be reduced, before muddying the waters further with hastily penned rate caps and reform," she said.
A Carterton council spokesperson said they supported the intent behind keeping rates affordable.
"However, the reality for small councils like Carterton is that the cost of managing, renewing, and building new infrastructure has been increasing beyond two to four per cent in recent years. These rising costs have been a key driver of our rates increases," they said, adding that a blanket cap could limit its ability to invest and maintain services.
"We will work closely with our Wairarapa partners as we consider next steps, and we look forward to reviewing the draft legislation when it is released."
Consultation on the proposals is open until February, with the legislation planned to be enacted next year, coming into law from January 1, 2027. After this, a transition period would allow councils to integrate the new rules into long-term planning.
LDR is local body journalism co-funded by RNZ and NZ On Air
