The Government has decided it will cap annual council rate increases at 4%. We've been talking about it for more than a year now, but the cap will take effect in 2029 – councils will need to consider the cap from next year. Local Government Minister Simon Watts told Mike Hosking the reason for it was to ease pressure on households, and although the national average will be savings of just $34 a week, Simon Watts said for many ratepayers the cap will be meaningful. 

"The key of $34 is across the country, but if you're living in Waitaki, down the bottom of the South with a 17% increase, that's a $600 increase on an average bill of three and a half grand, and you know, that's not immaterial by any stretch. And also then you've got to think about the compounding as well. You know, as these bills increase, three numbers: 14.2% increase last year, 9.2% average increase in rates this year, under us it's going to be 4% going forward. That's going to be the limit, and if you think about the compounding effect of that over years, that's some pretty big savings over a 5 to 10 year period for a household." 

As I say, we've been talking about a rates cap ever since National got into office – I still don't think it's a good idea. If a council doesn't know how to budget properly, a rates cap, having less money coming into the coffers, is not going to suddenly make them sound husbands of the ratepayer dollar overnight. They're not going to be able to balance their books all of a sudden just because they have less money coming in. And yes, I'm sure we can all think of barking mad vanity projects that our rates money's been spent on, and that incenses us but the Australian experience shows us that a rates cap will see reduced services, delayed infrastructure repairs, and outdated facilities. Duh, of course it will. There's been a rates cap in some Australian states for around 40 years, and work just gets deferred and deferred and deferred or not done at all.  

And if the political aim of a rates cap for local government is to ease the financial pressure on households, impose fiscal discipline, and get back to the basics of what councils should be doing, why don't we have a tax cap right back at you, central government? How about you lead by example? I'd really love to see the central government impose fiscal discipline and get back to the basics rather than the nice to haves and the glory vanity projects.  

Are you for or against a rate cap? In some ways it'd be lovely to see a tiered approach to rates given that we've got away from the sense of community where we give a bit so that others might gain. You could have economy, premium economy, and business rates. Economy, you get the absolute bare minimum, but it means you don't get access to swimming pools, libraries, art galleries, and we'll fence off the playgrounds and the beaches, and you'll have to pay to get in. It's not a serious suggestion, but something will have to give.  

As Auckland Mayor Wayne Brown said last year, putting a cap on rates is not going to solve anything. It will just defer it for a couple of years, then in the end, when it has to be done, ratepayers will be paying even more. He says councils are faced with making decisions that involve significant investment and should not be restricted by governments telling us what we can and cannot do. So are you Team Simon Watts or Team Wayne Brown? Are you for the rates cap or are you saying this is just going to be deferred expense and a bleaker, less enjoyable community in which to live? 

The Government has decided it will cap annual council rate increases at 4%. We've been talking about it for more than a year now, but the cap will take effect in 2029 – councils will need to consider the cap from next year. Local Government Minister Simon Watts told Mike Hosking the reason for it was to ease pressure on households, and although the national average will be savings of just $34 a week, Simon Watts said for many ratepayers the cap will be meaningful.&nbsp;
"The key of $34 is across the country, but if you're living in Waitaki, down the bottom of the South with a 17% increase, that's a $600 increase on an average bill of three and a half grand, and you know, that's not immaterial by any stretch. And also then you've got to think about the compounding as well. You know, as these bills increase, three numbers: 14.2% increase last year, 9.2% average increase in rates this year, under us it's going to be 4% going forward. That's going to be the limit, and if you think about the compounding effect of that over years, that's some pretty big savings over a 5 to 10 year period for a household."&nbsp;
As I say, we've been talking about a rates cap ever since National got into office – I still don't think it's a good idea. If a council doesn't know how to budget properly, a rates cap, having less money coming into the coffers, is not going to suddenly make them sound husbands of the ratepayer dollar overnight. They're not going to be able to balance their books all of a sudden just because they have less money coming in. And yes, I'm sure we can all think of barking mad vanity projects that our rates money's been spent on, and that incenses us but the Australian experience shows us that a rates cap will see reduced services, delayed infrastructure repairs, and outdated facilities. Duh, of course it will. There's been a rates cap in some Australian states for around 40 years, and work just gets deferred and deferred and deferred or not done at all. &nbsp;
And if the political aim of a rates cap for local government is to ease the financial pressure on households, impose fiscal discipline, and get back to the basics of what councils should be doing, why don't we have a tax cap right back at you, central government? How about you lead by example? I'd really love to see the central government impose fiscal discipline and get back to the basics rather than the nice to haves and the glory vanity projects. &nbsp;
Are you for or against a rate cap? In some ways it'd be lovely to see a tiered approach to rates given that we've got away from the sense of community where we give a bit so that others might gain. You could have economy, premium economy, and business rates. Economy, you get the absolute bare minimum, but it means you don't get access to swimming pools, libraries, art galleries, and we'll fence off the playgrounds and the beaches, and you'll have to pay to get in. It's not a serious suggestion, but something will have to give. &nbsp;
As Auckland Mayor Wayne Brown said last year, putting a cap on rates is not going to solve anything. It will just defer it for a couple of years, then in the end, when it has to be done, ratepayers will be paying even more. He says councils are faced with making decisions that involve significant investment and should not be restricted by governments telling us what we can and cannot do. So are you Team Simon Watts or Team Wayne Brown? Are you for the rates cap or are you saying this is just going to be deferred expense and a bleaker, less enjoyable community in which to live?&nbsp;

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Kerre Woodham Mornings Podcast

Kerre Woodham: A rates cap won't suddenly balance council books

https://api.omny.fm/orgs/7784f840-c291-422a-924b-ad9000bbad71/clips/6f9c3c55-8e3d-4eaf-a519-b4b200196fcb/transcript