LGNZ Need to Release Their Bogus Rates Cap Maths
A rates cap could save your household $390.79 a year on average over the next seven years.
Local Government New Zealand says the Government’s rates cap would save households just $34 a year. That figure is wrong.
We asked LGNZ to show us how they arrived at it. They wouldn’t, or couldn’t, provide their workings.
So we did the maths ourselves and cracked their bogus claims.
Our assessment shows the average saving under the rates cap could be $390.79 a year over the next seven years.
LGNZ now has a choice: release the workings behind their $34 claim, or front up and admit they got the maths wrong.
Here’s how the numbers actually stack up.
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The Government’s Regulatory Impact Statement estimates its rates cap would save the average household $938 over seven years.
When we asked LGNZ how they got to their $34 figure, they referenced a Newsroom article from January 2026. The article claims because this is a cumulative saving, the saving would only be $33.50 a year (rounded to $34). Here’s what it looks like they've done:
|
Year |
Multiplier |
Increase Value |
Yearly Saving |
Saving Since Start of Cap |
|
1 |
1 |
$33.50 |
$33.50 |
$33.50 |
|
2 |
2 |
$33.50 |
$67.00 |
$100.50 |
|
3 |
3 |
$33.50 |
$100.50 |
$201.00 |
|
4 |
4 |
$33.50 |
$134.00 |
$335.00 |
|
5 |
5 |
$33.50 |
$167.50 |
$502.50 |
|
6 |
6 |
$33.50 |
$201.00 |
$703.50 |
|
7 |
7 |
$33.50 |
$234.50 |
$938.00 |
That's the trick. LGNZ have 'confused' how much the saving grows each year with how much households actually save each year.
The $33.50 figure is only the average annual increase in the saving. It is not the saving itself.
On the Government’s own numbers, the average household would save four times as much as LGNZ claims on average each year over the next seven years, with the annual saving getting larger over time.
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But have DIA also undercooked the savings?
DIA said that with rates increases capped at 4 percent, you’d save $938 over seven years.
|
Capped 7-Year Rates Bill |
DIA's estimated 7-Year Rates Bill (No Cap) |
Saving |
Annual Saving |
|
$26,083 |
$27,021 |
$938 |
$134 |
Working backwards, we can work out an implied starting average rates bill of $3,175.
|
Base Year |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
Total Multiplier |
|
4% annual increase |
|
|
|
|
|
|
|
|
|
1 |
1.04 |
1.08 |
1.12 |
1.17 |
1.22 |
1.27 |
1.32 |
8.21 |
And dividing the capped total rates bill by that total multiplier gives the starting bill.
|
Total Multiplier (Capped) |
Sum Total (Capped) |
Original Total (Base Year Rates Bill) |
|
8.21 |
$26,083 |
$3175.34 |
With the starting bill of $3,175 and the total 7-year estimated rates bill of $27,021, we can calculate that DIA's figures imply an average annual rates increase of 4.88 percent over the 7 years.
| Base Year | 1 | 2 | 3 | 4 | 5 | 6 | 7 | Sum |
| 4.88% annual increase | ||||||||
| $3,175.34 | $3,330.43 | $3,493.10 | $3,663.70 | $3,842.64 | $4,030.32 | $4,227.17 | $4,433.63 | $27,021 |
But rates increases have been significantly higher over the last decade than that 4.88 percent figure, with an average household increase of 6.50 percent over the last ten years.
|
|
Local Authority Rates and Payments (CPI Inflation Measure - Not Dollar Figures) |
|
2015Q3 |
965.05 |
|
2025Q3 |
1811.00 |
|
Increase |
845.95 |
|
% Increase |
87.66% |
|
Avg. yearly increase |
6.50% |
And if we then apply that average increase over the next 7 years, the saving would be much more substantial...
|
Base Year |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
Sum |
|
6.50% Annual Increase |
|
|
|
|
|
|
|
|
|
$3,175.34 |
$3,381.64 |
$3,601.34 |
$3,835.32 |
$4,084.49 |
$4,349.86 |
$4,632.46 |
$4,933.43 |
$28,818.54 |
|
6.50% Increase Sum |
4% Capped Sum |
Saving |
Annual Saving |
|
$28,818.54 |
$26,083.00 |
$2,735.54 |
$390.79 |
So, LGNZ claim rates caps will save you just $34 a year. We've calculated it'll save you $390.79 a year on average over the next seven years, and more (and more, and more) each year after that.
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