Councils push back on government's rates cap proposal. Photo: LDR
Local councils are worried about paying the bills if the government's proposed rates cap goes ahead, but critics say councils need to pull back on their spending.
Last year, the government proposed an annual council rates cap of between 2 and 4 percent.
Masterton District Council (MDC) and South Wairarapa District Council (SWDC) made submissions on the proposal to the Department of Internal Affairs last week, saying essential services would suffer.
Masterton Ratepayers and Residents Association president Lyn Riley described recent rates increases as 'unsustainable'.
"Councils need to stop doing the nice-to-have projects, and focus on essentials like horizontal infrastructure," she said.
"Do the infrastructure first and the other things later. The councils need to reign in their spending."
James Ross, head of policy and legislative affairs at the New Zealand Taxpayers' Union, said the proposed cap was above inflation.
"There is no reason councils shouldn't be able to at least maintain current service levels while taking larger and larger amounts of ratepayers' money every year.
"The most democratic rates cap model would cap increases with inflation, and require councils to hold a rates referendum if they wish to breach the cap. This also allows for higher rates increases if that's what ratepayers feel they need," he said.
Masterton District Council's submission said the proposal would constrain councils' ability to respond to the needs of the community, effectively taking the 'local' out of local government.
"MDC acknowledges the importance of strong fiscal discipline, and we actively pursue it. However, a centrally imposed cap is not the right tool."
The submission included examples where council services filled funding gaps, including refugee resettlement programmes, extending climate fund criteria to support the agricultural sector, and providing social housing for the elderly.
"By constraining councils within a centrally prescribed range, the rates target model erodes the democratic function," it said.
Additionally, councils would be asked to invest for long-term resilience, but be restricted in the ability to pay for it.
"Underinvestment becomes more likely," it said, using the example of funding resilience work on Mataikona Road.
MDC thought the real cause of rates rises were rising costs.
Both Masterton and South Wairarapa district councils said a cap made it likely facilities like libraries and pools could become less accessible to the people who benefitted most.
SWDC also shared their submission to DIA, which shared many of the concerns set out by MDC.
"South Wairarapa District Council opposes the introduction of a statutory rates cap/range in principle. It constrains local democratic decision‑making, is not cost‑reflective of council activities, and, if implemented as proposed, would degrade service levels and infrastructure over time."
It said the model interfered with the autonomy of local government in setting funding policy, failed to recognise local growth dynamics, and would result in underfunding of infrastructure.
Known pressures in the SWDC long term plan included fixes for Cape Palliser Rd, aging community assets, and rising insurance.
"The majority of the roading network, particularly the bridges, were built approximately a hundred years ago and we are now struggling to sustain them in the face of increased heavy vehicle traffic, visitor traffic, and flooding/erosion events.
"Dozens of bridges across South Wairarapa are approaching end‑of‑life, and a cap would force deferral of renewals."
Carterton mayor Steve Cretney said the council's focus would be on ensuring delivery for the community.
"Affordability is important, especially for people on fixed incomes. However, a cap could limit councils' ability to maintain essential services and infrastructure," he said.
"Reforms bring change and that can affect workloads. Without knowing the specifics, it's difficult to say, but we will support our staff so they can keep delivering for our community."
LDR is local body journalism co-funded by RNZ and NZ On Air.
