A report commissioned by Local Government NZ has found homeowners are facing, on average, a 15 per cent increase in rates across the country.
The report, put together by Infometrics, looked into data in draft long-term plans across 48 councils, and revealed the significant cost pressure facing the local bodies.
It found infrastructure costs have increased by about a third, with bridges 38 per cent more expensive to build, sewage systems 30 per cent more expensive while roads and water supply system costs have increased by 27 percent.
LGNZ vice-president Campbell Barry said the problems had been decades in the making.
“Councils’ share of overall tax revenue has remained at 2% of GDP for the past 50 years, despite our ever-increasing responsibilities.
“On top of the cost increases to existing assets and services, councils also face new pressures that require new spending.”
Far North District Council is proposing an increase of 16.5 per cent. Mayor Moko Tepania said the region’s roads had been in need of repair for a long time and last year’s cyclones made that worse while the abolishment of the Three Waters reform would add more pressure on councils coffers.
“Pāpaku mārika ngā pūkoro o tēnei rohe, engari e kore taea te pēhea. E aroha ana ki te iwi.”
(Our region is really struggling financially, and that is the reality of our situation. I sympathise with our communities.)
One Far North District Council ratepayer Te Ao News spoke to is concerned the increase will only add pressure on her whānau.
“My partner and I work very hard to pay everything that we have, everything that we need, to put a roof over our head. And to hear that the rates might be going higher, it’s not easy at the moment,” Te Awatea Pawa said.
Tepania conceded that the rate rise would not cover the actual costs facing the council. While some councils were having to prioritise water infrastructure, he said his council was focusing on the rebuild of roads in its long term plan.
“Ka whakapau i a mātou te $105m ki te whakatikatika haere i aua horonuku, horowhenua i puta mai i mua kē atu i a Huripari Kapiere. Ka tāpiri atu ki tēnā ko te $165m ki te āta whakatika i ngā rori i konei.”
(We are looking at spending $105 million to repair the landslides and washouts that occurred even before Cyclone Gabrielle. Added to that is another $165 million being spent on repairing damaged roads up here.)
Some better off than others
The LGNZ report shows the latest average increase is nearly three times higher than the average annual increases between 2002 and 2022 which were 5.7 per cent. Barry, who is also the mayor of Hutt City, said constantly relying on ratepayers to fork out for council expenses was unsustainable.
“Many households pay $2000-3000 per year for just one service, such as power. It’s important to remember that rates account for a huge range of infrastructure and services communities rely on, including many that are invisible until something goes wrong,” Barry said.
“This includes meeting the demand for infrastructure in high-growth areas, coping with growth in tourism, adapting to climate change and increasing natural hazards, transitioning to a low carbon economy and dealing with emerging biosecurity threats.
“It’s no secret that the funding system for local government is broken. Rates account for more than half council funding, and relying so heavily on rates alone is unsustainable.”
Barry’s council is proposing a 15.9 per cent rise, while the two largest cities, Auckland and Christchurch, have proposed lower-than-average increases of 7.5 per cent and 13.3 per cent respectively. However, Hamilton City is proposing a 25.5 per cent hike, while Buller District, which itself has been hit hard by severe rain and flooding in recent years, is asking for a whopping 31.8 per cent rise.
Stringent savings has allowed Napier City to ask for a 23.7 per cent hike rather than the 43 per cent it originally feared would be required.
Barry said legislative changes were required to help councils ease the financial burden on ratepayers.
“We need a range of levers to address the funding and financing challenges in front of us, such as an accommodation levy, GST sharing on new builds, congestion charging and tourist levies.
“A four-year term of local government would also double the productivity across councils and provide certainty which would create a longer-term pipeline of work for the private sector to partner with councils on,” Barry said.