New Campaign Launched to tell Government to Cap Rates Now
The Taxpayers' Union is launching a new nationwide campaign calling for Local Government Minister Simon Watts to 'Cap Rates Now' and adopt CPI-level limitations on councils hiking rates. The launch of the Cap Rates Now campaign coincides with the opening of National Fieldays and the release of Auckland Council's new property valuations.
We're calling on ratepayers across New Zealand to join us in asking Mr Watts to Cap Rates Now by signing the petition at CapRatesNow.nz.
"Council rates are out of control. Until they are capped, councils have little incentive to focus on core services and providing good quality infrastructure," said Taxpayers' Union Local Government Campaign Manager Sam Warren.
A March 2024 Taxpayers' Union-Curia poll found that nearly two-thirds of New Zealanders supported referendums for rates increases beyond inflation. and less than one quarter opposed. There was majority support for referendums in all gender and age groups.
"For years, skyrocketing rates have been a major driver of inflation and the cost of living crisis. Rates have increased 34 percent in New Zealand since 2022, compared to only 14 percent in the UK and 8 percent in Australia. Enough is enough."
"Rates caps are common in Australia and the United Kingdom, and last year even Prime Minister Luxon appeared to be fan," said Warren.
"Behind the scenes, we know that council officials, and their lobby group, LGNZ, have been trying to strong arm Simon Watts and lobby against this common-sense policy. Local Mayors try to claim local government is underfunded, but when you look at the numbers, the dramatic increases in rates revenue have been wasted on nice-to-haves and staff costs, rather than core capital infrastructure investment," said Warren.
"That's why we're calling on ratepayers to join us in our call to Cap Rates Now."
"In special circumstances with a good reason to increase rates over-and-above inflation, councils should seek the public mandate via referenda. That is the sensible compromise for LGNZ, who have been spending ratepayer money to lobby against rates capping."
Q&A - RATES CAPPING: PROTECTING HOUSEHOLDS AND IMPROVING LOCAL GOVERNMENT ACCOUNTABILITY
The Taxpayers’ Union is advocating for the introduction of rates capping in order to protect households from excessive local government rate hikes and to improve local government affordability. This Q&A outlines the rationale behind rates capping and the benefits it offers to ratepayers and communities across the country.
What is rates capping?
Rates capping limits the annual increase in local government rates to a fixed percentage (usually tied to inflation or a combination of inflation and population growth) unless a council seeks approval from its community to exceed the cap.
What is the Taxpayers’ Union proposing?
The Taxpayers’ Union is calling on the New Zealand Government to introduce legislation that sets a default cap on annual council rate increases linked to inflation and population growth, with any proposed increases above the cap requiring direct approval through local referenda.
Why is rates capping necessary?
Over the past decade, local government rates have been a primary driver of CPI inflation and the cost of living crisis. That has placed a growing burden on households and businesses. Many councils have failed to deliver core services efficiently while expanding into areas beyond their core responsibilities. Rates capping helps rein in unsustainable spending and forces councils to focus on core, essential services.
How does rates capping benefit ratepayers?
Rates capping provides cost certainty for households, especially those on fixed or low incomes. It forces councils to prioritise spending, seek efficiencies, and engage more transparently with their communities when proposing large-scale projects or expansions beyond core services.
Does rates capping compromise service delivery?
No. Rates capping does not stop councils from raising revenue for important projects – it simply requires them to justify those increases publicly and gain community support. This leads to better scrutiny and more democratic accountability, not lower quality services.
How does New Zealand compare internationally?
Jurisdictions such as England and New South Wales have successfully implemented rates caps for decades. These policies have limited rate increases while maintaining service quality and driving efficiency in local government operations.
What are the economic benefits of capping rates?
By keeping cost growth predictable, rates capping reduces pressure on household budgets and increases disposable income. It also enhances the competitiveness of local economies by making it easier for businesses to plan and invest without being surprised by large rate hikes.
Is this policy relevant in the current economic climate?
Yes. With cost-of-living pressures intensifying and many households struggling to make ends meet, rates capping is a timely and necessary reform. It ensures local councils cannot continue to shift the burden of their own inefficiency onto ratepayers.
What if there is an emergency?
In the event of an emergency, such as a natural disaster or critical infrastructure failure, councils would still be able to propose rate increases above the cap. However, any increase beyond the cap would still require approval through a local referendum. This ensures transparency and maintains democratic accountability, even in extraordinary circumstances.