John MacDonald: Remind me why a rates cap is a good idea

Author: John MacDonald,
Publish Date: Wed, 26 Aug 2026, 12:21pm

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The extra $20-a-week most of us got from the government’s tax cuts was like winning First Division Lotto, compared to the miserly amount you and I are going to save when this cap on council rates kicks in.

The Local Government Minister has confirmed that the rates cap will come into force in July 2029 and will ban councils from anything higher than a 4 percent annual increase.

And, when it does, we’ll save, on average, $34 a year.

Which proves that this is yet another placebo policy. A policy that might make some of us feel good, but won’t actually make much difference.

It will make a difference for the local councils. Because the screws will go on their budgets.

But it will make next to no difference for ratepayers. And the government needs to acknowledge that, get some backbone and change its thinking on this.

Because what good is a mind if you can’t change it?

How Local Government Minister Simon Watts can talk about these miserly savings for ratepayers and keep a straight face, I’ll never know.

But there are three choices facing councils, now that they’re going to be limited to 4 percent annual rates increases.

They can borrow more. How do you like the sound of that? Especially if you think council debt is a real problem. I heard Simon Watts saying that councils can access cheap loans. But debt is debt.

They can charge us more for services. Because there’s not going to be any limit on how much councils can increase fees for consents and library services and getting into places like council pools. They won’t be allowed to increase the rates by anything more than 4 percent, but they can go to town with other fees.

Or they can trim their services back to the bare bone. Fewer rubbish collections anyone? More unrepaired roads anyone?

See what I mean?

And we can have some or all of those options while, at the same time, saving a miserly amount on our rates bills. On average, $34 a year.

Is there any good I can see in all of this?

At a push, I would say that it’s probably got councils focusing or thinking a bit more about costs and expenditure.

But I think they, generally, do that anyway.

They just seem to get snowed under by all the demands we place on them. We demand more. It costs more.

This isn’t me saying that councils should be allowed to run free and spend whatever they want. But, as anyone who has thought they can become a local councillor and deliver zero rates increases has discovered, that kind of talk is cheap.

The reality is, it costs money to run councils and deliver council services. That’s why this 4 percent rates cap the government is forcing on councils is not going to do anyone any favours.

It’s not going to do councils any favours. And saving a pitiful $34 a year isn’t going to do ratepayers any favours, either.

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