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6:00 am, December 2nd, 2025 - 37 comments
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Open mike is your post.
For announcements, general discussion, whatever you choose.
The usual rules of good behaviour apply (see the Policy).
Step up to the mike …
Rates caps are a dumb idea. Not because rates don’t hurt (they do), but because caps are a feel-good shortcut that makes the real problem much worse.
1) They confuse the symptom for the disease.
When rates rise fast, it’s usually not because councils are on a lark buying gold-plated nonsense. It’s because costs councils can’t dodge are rising faster than inflation: water and roading renewals, insurance, climate-damage repairs, debt servicing, and central-government mandates.
LGNZ has been blunt that capping assumes “excess spending” is the driver, when the driver is structural cost pressure and decades of under-investment.
2) “Cap now, pay later” is how you get potholes, pipe bursts, and bigger rate shocks.
If you hold revenue below what assets need, councils don’t magically become richer, they defer maintenance. Victoria’s decade of rate-capping shows the pattern: service cuts, maintenance backlogs, and then emergency “catch-up” hikes anyway.
A cap doesn’t remove the bill; it just adds interest and turns planned renewals into crisis replacements.
3) It actually raises costs by forcing increased debt levels
If rates can’t keep up with required renewals, the only lever left is borrowing (or selling assets). That’s why S&P explicitly flagged NZ’s proposed rates cap as a credit negative and downgraded parts of the sector in 2025.
Higher perceived risk = higher interest rates = higher long-term rates.
So the cap meant to protect ratepayers ends up making everyone’s mortgage bigger through the back door.
4) It’s a blunt, one-size-fits-all tool.
Councils aren’t uniform. Some are growing fast and need new pipes yesterday. Some are rural with tiny rate bases and huge networks. A universal cap ignores starting conditions, disasters, and different asset ages. That’s a core critique from Australian evidence.
5) It centralises power and weakens local democracy.
A rates cap means Wellington gets a veto over what your community votes to fund. Even if you hate your council’s priorities, the fix is accountability, elections, and transparency and not stripping local government of the basic right to raise local revenue.
6) We’ve seen this movie overseas: caps lead to degradation, then blow-outs.
England’s tight council-tax limits helped push councils toward bankruptcy-adjacent budgets; governments then have to lift caps or approve massive one-off rises to keep the lights on.
Caps don’t stop pain.They postpone it, concentrate it, and make it uglier.
It also attacks local democracy.
If people want rates to rise more slowly, they already have the most powerful tool available in a democracy: the vote. Councillors set rates, and if communities dislike the priorities or the pace of increases, they can vote those councillors out. If we elect people who raise rates, that’s on u, and we have a democratic mechanism to change it next time.
A rates cap takes that choice away. It shifts power upward, letting central government override what a community is willing to fund. Even if a council is transparent, responsible, and has public backing to invest in infrastructure, a cap blocks that democratic mandate. It replaces local accountability with central control.
That’s the fundamental issue: rates caps aren’t just bad policy; they undermine the core principle that local people should decide local priorities.
[Typo in user handle makes work for Mods. Please be more careful next time – Incognito]
Mod note
Sorry and noted
Nicely written Res. Agree totally.
In reality, as you imply, rate caps are unworkable. They don't allow for special circumstances or massive growth in some regions.
Under the Nats’ system you can apply for an exemption to go over 4% if special circumstances apply. Who decides whether this is true and how long is this process going to take? And how much is this new layer of regulatory administration going to cost?
District councils understand what is needed because they are DISTRICT councils. Luxon seems to be obsessed with removing local democracy. At the moment you can vote the buggers out if you don’t like how they are spending your money.
They also plain don't reflect reality on the ground.
The whole idea seems predicated on a bunch of lazy reckons that assume any rates increases are solely driven by a lack of financial discipline, or "inefficiency" on the part of councils.
It's also using an insane apples with oranges comparison by trying to track rates with the CPI, when the actual costs of infrastructure have increased by many times the prevailing inflation rate year-on-year.
The fact of the matter is, forcing a cap on rates increases is essentially forcing a cut to services.
This'll be fun if National manage to get re-elected next year and consequences of this play out. Unfortunately this might take a bit longer than Oct next year, if the COC lasts that long.
It's not really a comprehensive rates cap though, water services are excluded. Normally in local government the things ratepayers can't see, like 3 waters, get bundled up in roading and civic redevelopment projects where ratepayers (and taxpayers) are getting something they can see and touch. Now any council or public servant worthy of the job will package these projects as a 3 Waters rehabilitation / capacity upgrade and all will be sweet, the flash new streetscape just being carefully offset against a generous cost item out of 3 Waters budget to reinstate the old street works.
Net result on ratepayers pockets will be strongly negative, the work has to be done quite urgently and has to be paid for. Unfortunately it's going to take 2-3 years for this to become apparent and this Clayton's rate cap will be shown for the performative claptrap that it is.
Call me a paranoiac. Or a cynic. But maybe kneecapping the sector is the point.
Nope, you’re a realist; the kneecapping is an objective to achieve a goal that’s been writ large by the Coalition when they signed their damn agreement. Just remember who their known backers are.
Yep. Give it a few years and the tune will change to "Councils have proven completely incapable of providing adequate local infrastructure. It's time the private sector was given the opportunity to demonstrate the greater efficiency[sic] it would bring to this."
But really how much effect on rates, and Council outputs (excuse the 90's managerial nonword) is this going to have. 3 Waters will be exempt, roading is already pretty much exempt as it's mostly NZTA funded, and Councils can say 'not us' to ratepayer.
As I said, more will be quietly slotted into 3 Waters projects and life will go on, pretty much as has happened up to now, except it'll be 3 Waters that has the cost blow outs, and they'll be beauties. Down here we've just had our "Road to Nowhere" saga where a bypass road that should have been built 30 years ago got funded thanks to Covid. Costs, and time frame blew out spectacularly, mostly 3 Waters past and present related, and the usual suspects went apoplectic. Kinda settled down now that everyone realises that the result is actually pretty neat and makes the town work better, but it's a good example of what Councils have to work through / against.
Sometime in the near future National will be able to tick the "Rates Cap" box electorally and have a good crow and maybe hold onto a bit more of the Grey / Struggling Middle vote. Our place to try and point out that it's just performative claptrap and not that much will change, fully expect future rates + 3 Waters invoice will be greater than last years combined rates (inflation adjusted), and likely dramatically.
Worth noting roading isn’t ‘exempt’ in reality
NZTA drastically cut the FAR (funding assistant rate) they give to councils each year in the 2024-27 National Land Transport Program. In some cases, to less than half of what was initially expected.
That’s left councils with a serious funding shortfall for local road maintenance and renewals, even if 3 waters assets will technically be off the books.
Great synopsis Res.
Unfortunately the proposed cap on rates is the same as the promised tax cuts offered at the last General Election. For the majority of people, it will be attractive despite the fact that it doesn't bear basic scrutiny.
Can’t help but smell a whiff of nanny state too.
It's
1.a cap on spending for plebs who rent (library's, pools and parks)
2.dependence on central government funding for social housing, creative arts etc
3.posing as the champion of lower cost rates for those who care not for community agency
Yeah, it sounds like common sense until you follow the costs to their destination.
Scrolled the local FB pages this afternoon and it was grim. So many people seem to think council staff are overpaid bludgers, or that my job is dreaming up ways to fleece ratepayers. I am a ratepayer. I’ve got a mortgage, a family, and I’d earn a lot more doing the same work privately.
The best bit is the hypocrisy: the folks cheering this on are the same tight-fisted conservatives who scream “waste!” every time Council tries to invest in efficiency: better systems, better data, or wages above subsistence.
In their minds, I should do 90-hour weeks for minimum wage, using nothing more complicated than an abacus. Then spend my “free time” outside of that thanking them for letting me exist.
One of the things which makes me angry, is the way that government shift costs onto local government.
For example.
The whole leaky building saga should never have been a Council issue. The buildings were leaky because of poor quality materials, which were approved by the government agency. Remediation should have been a government cost (taxes) rather than local government (rates). And the government should have pursued firms through the courts (if required) on behalf of all of the builds affected.
The only people who have got rich through this process have been the lawyers.
I think a large part of the reluctance of councils to open up innovative building solutions (e.g. tiny homes) or reduce the costs of consenting new builds – has been driven by the costs associated with being the last man standing, and the fear of another issue occurring on their watch.
Absolutely.
The leaky-buildings fallout, and the way joint-and-several liability leaves councils as the “last man standing” when defects emerge, has completely rewired local-government incentives.
Instead of being rewarded for enabling innovation and efficient consenting, councils have learned that even a small regulatory role can translate into massive downstream liability. That risk aversion has become so entrenched that the Government has had to shift toward proportionate liability explicitly to reduce council exposure and consenting lock-up.
And we’re seeing a similar dynamic in climate and natural-hazard land.
There have been repeated cases where development proceeds in hazard-prone areas, risk is under-priced or minimised, properties are sold on, and then when flooding or other disasters occur the legal and political blowback lands on councils.
The result is predictable: councils become defensive regulators, because they’re the only solvent party left when things go wrong
When central government shifts system risk onto councils, it doesn’t just shift costs. It changes behaviour in ways that make innovation and affordability harder, not easier.
For many councils (certainly historically) the issue hasn't been about needing to cap rate rises, it's been that the rates haven't risen fast enough to deal with infrastructure deficits. The rate rises haven't even approached what the (theoretical) cap would be.
Councilors, typically, get elected on the promise of low rate rises (generalizing massively here) – which fuels the blow-out problem when all the chickens come home to roost (looking at you, Wellington) – decades, or even generations, later.
https://www.stuff.co.nz/dominion-post/wellington/122029687/12-billion-isnt-nearly-enough-the-scale-of-wellingtons-infrastructure-deficit
While I understand your desire not to weaken local democracy, what checks and balances are in place for a council which consistently underfunds infrastructure? Because the ballot box is probably too late.
There are checks and balances already.
Councils are required to produce a 10-year Long-Term Plan every three years, with annual plans in between, and both have to go through public consultation. Those processes are specifically meant to surface infrastructure needs, funding gaps, and trade-offs in the open.
The issue isn’t the absence of oversight. It’s that the political incentives have, as you pointed out, historically rewarded keeping spending (and therefore rates) artificially low. Deferring renewals is an easy win today because the consequences are delayed and land on future councils and ratepayers, while higher rates hurt now.
Even now you can see the same incentive loop: there are plenty of angry boomers out there positively beaming with glee at the idea of “wasteful” and “corrupt” councils being forced back to the “basics.” As if renewals and resilience aren’t basics.
That’s the real failure mode: not missing checks, but a feedback cycle that keeps pushing costs into the future until it turns into a crisis.
So, given that feedback cycle (about which I agree) – what is the external factor which would make the Councils resource infrastructure appropriately?
Because the 10 year plans, are simply mechanisms for implementing the spending and investment they've already agreed on. Some do this well. Some are adequate. Some are abysmal.
But there is nothing to force a council to (using the Wellington example) adequately fund the replacement of it's aging water pipe infrastructure through that 10 year plan. No one points the finger and says – you have 100 year old pipes – when do you plan to replace them? And no, you can't just choose not to do it.
People get outraged when pipes burst (in Wellington) and sewage overflows (in Auckland) – but that's at the wrong end of the decision-making curve.
The uncomfortable truth is that democracy includes the right to make bad long-term choices. Which also comes with an obligation to wear the consequences.
The fix isn’t an external overlord; it’s better democratic pressure earlier in the curve (public literacy, clearer asset reporting, political courage) so councillors can’t hide from the trade-offs.
Did the NAct1 icecream and movies make up for the mouldy mince? WTAF NZ ?
I have previously worked for a Hospital that used Compass group. IMO dodgy as….
2018 !…..
Kick NAct1 out 2026 !
AND Seymour blaming the school
Or cared about……
Of NAct1, (and collectively they are bad) this creep gives malevolence a particular twist….
Well Seymour needs to take a look at the latest version of RNZ's article:
And well….Indeed ! I note MS has started a Post on same.
The associate Minister of Health says "no illness as a result- that he knew of." Note he did not add "it's early days yet". Also note the weasel words "that he knew of", giving himself the old "I know nothing" excuse. Did he actually consult his Health Ministry staff about possible illness resulting, time lines for appearance of symptoms, severity and risk?
He tries a very risky line should, heaven forbid, a severe illness occur. First, he would wear some of that responsibility but also imagine the reaction of the parents of a very sick child to the snide disparagement by Seymour of the principal who did all she could to avert further catastrophe.
Note also that Seymour's National coalition colleagues might also have dim view of his disparaging a former 1999 National party list candidate as a 'frequent flyer'….
Aye Mac1. All of that. Creep Seymour using attack as the best means….only missing (just) victim blaming.
Says the frequently flyer in the media who always has something to grizzle about, usually anything he perceives as poor people getting 'nice' things, like food and shelter.
Seymour makes his disparaging frequent flyer comment about the principal, Dr Peggy Burrows. He then says, according to RNZ news, "he was keeping an open mind". Pfffft!
To be honest, after reading the article I felt sick too – with disgust. Not a word of concern for the children. What a self-centred, entitled and spiteful response, blaming it on the school principle as if she had asked for it. On the grounds of this issue alone he should be thrown out of parliament as he is unfit to hold power and control over anyone – let alone vulnerable children!
Believe me, I'm being very diplomatic with my wording.
Well done with your restraint. It ain't always easy…
I don't mind ditching restraint…….the man is an imbecile….moron….prat……nincompoop…..
That will do for now…….
Check out the Coastwatch reality TV series (see for example https://www.youtube.com/watch?v=cCoBmuaMHns&t=1025s).
So many people are ripping off the sea's natural resources – fish, cockles, crays. Offences concerning paua are particularly common. Illegal catches are huge, so there is obviously a black market with fish shops as the buyers.
Fisheries officers are doing a good job and can confiscate boats and cars used in offending.
I never buy paua fritters in a fish and chip shop; you have no way of knowing the paua was caught legally and stored correctly before it gets to the shop, so it could be a health hazard.
And thanks Naatz
My interest rates on savings are down abt 1%
Doesn't sound much ,but int abt 33% drop
There are some strange and dangerous people around. I sure hope these in particular are found before a Cyclist is badly hurt ! Note the mountain bike trails…..