By Moana Ellis, Local Democracy Reporting
Whanganui mayor Andrew Tripe says the Government’s plan to introduce a national rates cap could force councils to consider cutting services or increase user charges if it fails to keep pace with fast-rising costs.
The Government yesterday said it will bring in a cap of 2-4% on council rate increases and has begun consulting stakeholders ahead of legislation expected next year.
Tripe said Whanganui was relatively well placed due to “disciplined financial management” and its focus on affordability but warned the new regime would carry risks if it failed to reflect the true cost of delivering essential services.
He said the new policy comes at a time when local government was facing an “unprecedented wave of reform”. More detail was needed before the council could understand the full implications, something that would become clearer when it prepares its next long-term plan.
“I welcome greater fiscal discipline across the sector and Whanganui has demonstrated this in recent years. It is important we continue to provide household and business budgets with greater certainty and affordability.”
Tripe said the broader cost pressures affecting councils nationwide needed to be acknowledged.
“Local government has become the focus of public pressure, and I’m willing to own our part in that, but it’s important the public understands the full cost landscape.
“Electricity and insurance have both increased by more than 10% in the last year, and central government tax revenue has grown by over 6%.”
Tripe said Whanganui had shown “strong fiscal leadership”, pointing to this year’s 2.2 percent average rates increase – the lowest in New Zealand.
He said any national cap must allow councils to invest in essential long-term infrastructure, noting that more than 90 percent of Whanganui’s capital spending in the current long-term plan was tied to core infrastructure.
“We are focused on the basics, but the basics are increasingly expensive to deliver,” he said.
Tripe said the cost of resealing a kilometre of road had more than doubled between 2017 and 2023.
“For the same money, we can now resurface less than half the distance we could five years ago.”
Civil construction costs had climbed sharply, gas prices increased by around 90% last year, and electricity costs were predicted to rise substantially.
“If the council is unable to increase rates to meet rising costs, other options may need to be considered,” he said.
Tripe said those alternatives could include reduced service levels or increases to user fees.
“These are difficult conversations, and we will work hard to avoid them, but it is important the public understands the implications of a strict cap.”
Under the proposed regime, councils cannot exceed 4% without regulator approval.
A central government-appointed regulator will allow requests to exceed the cap only in “extreme circumstances” such as natural disasters.
From 1 January 2027, councils must account for the cap in long-term plans and report on financial metrics, including wage costs, rates as a share of house prices, and local infrastructure deficits.
The full regulatory model takes effect by 1 July 2029.
On Monday, Local Government Minister Simon Watts said ratepayers deserve councils that live within their means, focus on the basics and are accountable to their community.
“Rates are taking up more of household bills, and some communities have faced double-digit increases year after year. This is unsustainable and is only adding to the cost of living for many Kiwis.”
Tripe said the council would continue to engage with the Government as the policy develops and would assess the full impact during its long-term planning process.
Consultation runs through to February 2026.
Awa FM – Te Reo Irirangi o Whanganui
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