Mike's Minute: Rate caps – not a moment too soon

Author: Mike Hosking ,
Publish Date: Wed, 26 Aug 2026, 10:28am

So the Government has moved on rates.

The cap is 4%, unless there are exceptional circumstances.

Of all the price pressures that are out of control, rates would have to be the worst.

As we have heard this week, insurance is starting to curtail, if not fall, in some areas.

Power is actually falling for commercial users, although not to what it should be. Certainly, the cost of generation is down and once the build out of solar and wind is complete there can be no excuse not to see prices drop domestically.

Food is back down within the Reserve Bank band. 1.9% was your last reading.

Petrol is all over the place but beyond our control, which basically leaves rates.

Look at the last inflation read and look at the part that rates played in driving it up. And the difference between rates and all the other examples I have just given is there is no sign of it ever ending.

Oh they have excuses! "There is no shortage of jobs to be done." And even if you strip out the frippery, the nice-to-have nonsense, the multi-cultural nods to Lord-knows-what, you are still left with genuine and real tasks that need attending to.

But the reason those jobs are so overdue and urgent is because they were never done in the first place because the frippery always took precedence, and it took precedence because it got headlines and they knew the ratepayer was a never-ending pot of money.

Well, no more.

What makes it tricky of course is councils will have to fund work through debt. The trouble is for too many they are tapped out.

They drained that well, as well. So in a purely numeric way they are between a rock and a hard place. But then they have no one to blame but themselves.

They will hope Labour wins the election of course, because Labour will open the tap up.

Which leads to the question, if Labour let councils charge bed taxes and let them charge whatever rates they want, is that a broken promise given they said there is only one new tax?

Anyway, 4% is restraint and reality and fiscal discipline.

Not a moment too soon.