New Zealand council rates rose two and a half times faster than inflation, and households now pay more than Sydney for less

Council rates across New Zealand have risen 34.4 percent over the current three-year electoral term, against general inflation of 13.7 percent. That is not a rounding error or a one-off catch-up. Councils have grown the burden on households at roughly two and a half times the pace of consumer prices for three consecutive years, with no statutory constraint, almost no public scrutiny outside election cycles, and an opaque spending mix that even the country’s largest council struggles to explain in plain English.

The political consequences arrived in October 2025. Of the eighteen councils that imposed double-digit rates rises in 2025, fourteen elected new mayors, with Whakatāne’s incumbent Victor Luca losing to Nándor Tánczos on special votes. In December, Local Government Minister Simon Watts announced a rates cap of two to four percent per capita per year, to take legal effect on 1 January 2027 and full regulatory force by July 2029. The Taxpayers’ Union, which had been campaigning on the issue for over a year, claimed the win. Local Government New Zealand, which had spent the same period defending the spending, did not.

That is the political weather. The substance underneath is more substantial than the headline numbers suggest.

The headline numbers

The Taxpayers’ Union 2025 Rates Dashboard puts the average council rates increase for that year at 8.39 percent against annual inflation of 2.5 percent to the March 2025 year. Stats NZ’s June 2025 CPI release identified local authority rates and payments as the largest single contributor to annual inflation, up 12.2 percent over the year and accounting for 13 percent of the 2.7 percent total CPI rise. Wellington City lifted rates 16.9 percent for 2025/26, the steepest of the metros. Queenstown Lakes ranked fourth nationally for cumulative three-year increases at 50.23 percent. Auckland came in at the comparatively modest 5.8 percent set in its Long Term Plan, about $223 a year on the average residential property. Christchurch landed at 6.6 percent.

The total bills now sit at levels that would have been politically unthinkable a decade ago. The Taxpayers’ Union’s 2026 Ratepayers’ Report, which presents council financials on a per-household basis, has Porirua charging an average residential bill of $5,591, Wellington City $5,094, Queenstown Lakes $4,848, Carterton $4,771 and Nelson $4,650. Tauranga, Whakatāne, South Wairarapa, Waikato and Horowhenua all sit above $4,400. Upper Hutt at $3,393 is the cheapest of the urban councils in the comparator set. Auckland and Wellington households also pay separate regional council rates on top of those numbers.

Infometrics’ March 2026 affordability analysis for Wellington City Council gives the long-run picture. Median Wellington residential rates rose from $1,985 in 2012/13 to $5,177 in 2025/26, a 161 percent increase. Median household income over the same period grew from $88,000 to $138,000, well under half that pace. The Shand Report’s affordability threshold of five percent of household income is now being crossed in parts of the city, with rates as a share of income running from 2.3 percent in Wellington Central to 7.5 percent in Oriental Bay. Wellington’s commercial rates as a percentage of capital values are the highest in the country at 2.4 percent, which is one of the reasons CBD vacancy is what it is and one of the reasons the Wellington tax base is shrinking even as the rates take rises.

The pressure is showing up in collections. 1News reported in April that unpaid rates in Auckland grew from $75 million in mid 2023 to $106 million by July 2025, a 41 percent jump. Christchurch arrears climbed from $25.8 million to $31 million over the same period. Wellington’s arrears hit $31.9 million in 2024 before easing slightly to $29.7 million in 2025. Christchurch had the highest proportion of ratepayers in arrears at 10.7 percent at the end of June 2025. These are not abstract numbers. They represent households genuinely struggling to pay a bill that has compounded faster than their wages, their groceries, their power, or their mortgage.

How New Zealand compares with Sydney and the UK

The international comparison is where the discussion usually becomes confused, because every jurisdiction bundles services into the rates bill differently. The honest version is this. In New South Wales, the typical ordinary residential rate runs between AU$1,000 and AU$1,500 per year, which is roughly NZ$1,100 to $1,650. Sydney’s Inner West averages AU$1,282, Sutherland AU$1,482, Ryde AU$1,145. But NSW councils charge water, sewerage and waste separately, and once those are added, a typical Sydney household pays around AU$3,000 to $3,500 in total local government charges, or roughly NZ$3,300 to $3,850. That is still below what Porirua, Wellington City or Queenstown Lakes households pay, despite NSW having higher property values, larger councils and far greater infrastructure demands. NSW also has a rates cap, set annually by IPART, which is the model Wellington is now copying.

In England, the average Band D council tax for 2025/26 is £2,280, roughly NZ$4,800, with a statutory cap of about five percent annual increase without a local referendum. London boroughs average £2,068, shire counties £2,452. Wandsworth comes in at £1,028 at the bottom, Dorset at £2,765 at the top. UK water is privatised and billed separately. Scotland’s average Band D is £1,527 plus around £400 for water and waste from Scottish Water. Wales sits at £2,125. Several New Zealand councils now charge their average household more in absolute dollars than the average English Band D household pays for an equivalent or broader bundle of services, despite English property values and underlying incomes being substantially higher. Once equivalent services are bundled in, New Zealand rates are no longer competitive with the jurisdictions we like to benchmark ourselves against.

What councils must do, and what they choose to do

The question that has not been asked seriously by either central or local government for over a decade is what councils actually have to do, as distinct from what they have chosen to do. The Local Government Act 2002, which is the statutory framework, was amended in 2025 to explicitly define a category of “discretionary function” as “any activity or service that a local authority is not specifically authorised or required to undertake or provide by or under an enactment but that is instead provided by the local authority in accordance with its discretionary power under section 12(2).” That definition is doing real legal work. It distinguishes the things councils must do under specific statutes from the things they have decided to do because they wanted to.

The genuinely mandatory functions are narrower than most people assume. Three waters under the Local Government Act and the new Local Government (Water Services) Act 2025. Local roads under the Land Transport Management Act. Building consents under the Building Act. Resource consents and district plans under the RMA. Civil defence. Dog control, food premises licensing, sale of alcohol. Cemeteries. Solid waste minimisation. That is essentially the legally compulsory list. Everything else, including the libraries, the swimming pools, the parks above bare reserve standard, the community centres, the public art, the economic development agencies, the event subsidies, the destination marketing, the climate strategy beyond what the RMA requires, the sister city programmes and the behavioural change campaigns, is discretionary in the legal sense. Communities may well want some or all of those things, but councils are not required to provide them and the cost of providing them is a choice, not a constraint.

Auckland’s spending since amalgamation

This brings the conversation around to Auckland, where the data is best and the politics are sharpest. Auckland Council’s Annual Plan 2025/26 totals around $4 billion in capital expenditure with comparable operating spend. Transport receives $1.7 billion of capital and $1.7 billion of operating funding. Water investment is handled by Watercare, which has a $13.8 billion ten-year capital programme running through to 2034. Local boards handle parks, libraries, community facilities and local events. The corporate centre, classified as “well-managed local government,” accounts for $692 million of capital and $692 million of operating spend in the current year alone.

The NBR’s September 2025 analysis of Stats NZ data on Auckland Council found that since amalgamation in 2010, operating expenditure has grown from $2.7 billion to $6 billion. That is a 120 percent increase in thirteen years. Adjusting for both inflation and population growth, real per capita spending has risen 34 percent over the period, compounding at 2.3 percent a year for over a decade. The supercity was sold to Aucklanders in 2009 and 2010 on the promise that consolidating eight councils into one would deliver efficiency savings and reduce duplication. The number on the page says the opposite has happened. Real spending per resident has risen by more than a third in inflation-adjusted terms, despite the consolidation, despite the population growth that was supposed to allow fixed costs to be spread over a bigger base, and despite the rates increases that have funded the whole thing.

The most striking line in the NBR analysis is on composition. In 2012, 17 percent of Auckland Council expenditure was classified as “support services” and “other activities.” By 2024, the category labelled “all other activities” had grown to 22 percent of the budget. That is the second largest category in the council’s expenditure mix, behind only transport at 24 percent and ahead of water, parks, libraries, regulatory services and every other identifiable line. Auckland Council does not publish a granular breakdown of what falls inside “all other activities.” Aucklanders are paying, in 2024 dollars, roughly $1.3 billion a year on a category the council itself does not describe in its summary documents in terms detailed enough for a ratepayer to interrogate. That is the single largest disclosure gap in the supercity’s budget.

The Tātaki Auckland Unlimited story

The acronym ATEED, which still surfaces in ratepayer commentary, no longer refers to an existing entity. Auckland Tourism, Events and Economic Development merged with Regional Facilities Auckland on 1 December 2020 to form a new council-controlled organisation. The merger and what followed is a useful case study in how the supercity model handles structural change.

The merger was the product of a July 2020 independent review of Auckland Council’s CCOs, which concluded that ATEED and RFA had overlapping goals and that combining them would produce efficiencies. The two entities had a combined annual budget of $175 million at the time of merger. The projected annual cost saving from the consolidation, according to figures cited by the council itself, was $6.7 million per year over the first decade. That is a saving of 3.8 percent on the combined budget, spread over ten years, in exchange for a full structural reorganisation, a rebrand, and the transition costs of merging two large organisations. Even taking the projection at face value, the business case was thin. The first round of the merger was therefore less about saving money than about reducing the visible number of CCOs from five to four.

What ratepayers paid for, in the eighteen months that followed, was a sequence of decisions that would be hard to justify in commercial terms. The merged entity was initially named Auckland Unlimited Limited. Eighteen months later, on 13 May 2022, the council renamed it again to Tātaki Auckland Unlimited. Two full rebrands inside an eighteen-month window, with all of the associated new logos, signage, stationery, web infrastructure, vehicle livery, marketing collateral, IT system reconfiguration, business card reprints, building signage replacements, and external communication costs that go with rebranding an organisation that operates the Auckland Zoo, the Auckland Art Gallery, the Aotea Centre, the Civic Theatre, multiple stadiums and a city-wide tourism marketing function. The council has not, to date, published a consolidated total of the combined transition and rebranding costs across both renames.

The merger also produced significant restructuring costs that are partly visible in the public record. RNZ reported in September 2023 that, in the wake of Auckland Council budget cuts, Tātaki Auckland Unlimited paid out redundancy for 82 roles, against 61 at Auckland Council itself and 11 at Eke Panuku. That is one round of redundancies inside one CCO. It does not include the original merger redundancies in 2020 and 2021, the second wave of restructuring associated with the May 2022 rebrand, or the further round of cuts that came in 2024 and 2025 as the economic development function was peeled off and moved back into council. Each round generated severance liabilities, contractor and consultant costs, change management spend, and the productivity loss that comes with extended periods of internal uncertainty about who will still have a job when the dust settles.

By 2024, with the merged entity’s annual budget standing at around $125 million, Wayne Brown was publicly calling Tātaki a “tourism promotions company” and a “travel agency” and questioning why the council was subsidising it. In December 2024, after months of leaked memos and sustained public criticism, councillors voted to abolish Eke Panuku, the urban regeneration CCO, and to strip TAU of its economic development role. The economic development functions moved into Auckland Council on 1 July 2025, into a new in-house Economic Development Office under direct elected member oversight. Brown initially wanted to go further and strip TAU of major events and destination marketing as well, but he backed off after tourism sector pushback. TAU continues to run events, venues and destination marketing under a smaller budget.

The story arc in plain terms. In December 2020, Aucklanders paid for a merger justified by projected savings of 3.8 percent over a decade. In May 2022, they paid for a rebrand of the merged entity. Between 2022 and 2025, they paid for multiple rounds of restructuring inside the rebrand. In July 2025, they paid for a partial unwinding of the original merger, with the economic development function moved back into the council it had been moved out of fifteen years earlier when ATEED was first established as a CCO. Each step generated transition costs, severance costs, consultant costs, IT migration costs and brand reset costs. Each step was justified by a business case projecting efficiencies. The group-level numbers show real per capita council spending across Auckland Council has continued to compound at 2.3 percent per year through the entire period.

The structural lesson is straightforward. Arm’s-length governance with self-renewing boards and minimal political accountability tends, over time, to grow the budget and headcount of the entities subject to it. The cost of each individual decision is diffused across 1.7 million ratepayers, while the benefit of each decision is concentrated on the small number of staff, consultants and contractors directly involved. There is no internal counterweight in the system. When Brown moved to strip TAU of its economic development function in 2024, it was the first serious structural reversal in the supercity’s fifteen-year history, and it required a mayor willing to take sustained political damage from the cultural sector to deliver it.

That reform matters. It does not abolish the spending, but it brings the economic development function inside the council’s main budget, under direct councillor oversight, with the same transparency obligations as any other line item. The CCO model that the supercity legislation introduced in 2010 has been steadily rolled back since. Bringing economic development back inside Auckland Council is the right call. The harder question is whether the spending itself should exist in any form, and that question is not settled.

The case for and against council funded events

The case for ratepayer funded economic development, in its standard form, runs through the multiplier argument. TAU claimed that events it helped bring to Auckland in late 2022, including the Women’s Rugby World Cup, generated a near $40 million economic boost for the region. Another set of figures claimed $18.7 million in regional spending from ten events against $4.8 million of TAU expenditure. Tourism New Zealand makes similar claims at the national level. Treasury makes similar claims about visitor spending and GST returns to central government. Hospitality, accommodation and retail businesses near event venues will testify that big events lift their takings.

The case against is straightforward. Most economic impact studies count gross expenditure rather than net. They do not subtract the spending Aucklanders would have done locally anyway if the event had not been held, the displacement of other visitors during peak periods, or the opportunity cost of the ratepayer dollar that could have funded a different activity. They count visitor spending without netting off the cost of the council subsidy that brought the event to town. They count jobs without asking what those workers would have been doing in the counterfactual. The benefits accrue to specific industries, hospitality and accommodation in particular, while the costs are borne by every ratepayer including those who never attend a single event. This is a classic pattern of concentrated benefits and dispersed costs.

The cleanest economic argument against council funded events is that the parties who benefit, including event promoters, venue operators, hospitality businesses and accommodation providers, are perfectly capable of organising commercial sponsorship and pricing to fund events that are genuinely commercially viable. If an event cannot attract commercial backing without a ratepayer top-up, that is information. It is telling us the event does not produce enough genuine value to cover its costs in the eyes of the people closest to it. The ratepayer subsidy substitutes political judgement for commercial judgement, and the political process is more accessible to event promoters, venues and accommodation providers than it is to ratepayers in aggregate.

The same logic applies to music in parks, public festivals, summer concert series and the wider category of council funded community events. There is a defensible reform position here that is not “councils should ban these things” but “councils should enable them rather than fund them.” Anyone who has tried to organise a community event in Auckland knows that the permit costs, the alcohol licensing, the traffic management plan, the noise consent, the health and safety compliance and the council processing times run into thousands of dollars and months of paperwork. Strip that out, set up a fast-track approval pathway for small to medium scale community events, charge cost recovery only on the genuine compliance work, and many events that currently rely on grants become commercially or community viable on their own. The council’s role shifts from picking which events to subsidise to clearing the path for the events the community actually wants to put on.

This is harder to do than it sounds. Some of the compliance cost is driven by central government legislation that councils cannot unilaterally override. Some of it is driven by insurance markets that councils do not control. Some of it is driven by genuine public safety considerations that have been hard won over decades. But a substantial fraction of it is councils piling on additional process and cost because they can, and because the people who pay those costs are diffuse while the people who benefit from the process, including the council’s own consenting and licensing staff, are concentrated.

The rates cap, and what it can and cannot do

The rates cap announced in December 2025 will, if it holds, force these questions into the open. Watts has signalled a target band of two to four percent per capita per year. Water charges and other non-rates revenue are excluded. General rates, targeted rates and uniform annual charges are all in scope. Councils will need permission from a new regulator to exceed the cap, and permission will only be granted in “extreme” circumstances such as a natural disaster or proven historical under-investment. Legislation is expected to be enacted during 2026, with the cap taking legal effect from 1 January 2027 and the full regulatory model in place by July 2029. The political timing is calibrated. The cap does not bite until after the 2026 general election and most of the way through the 2028 local body cycle.

The credit rating agencies have already responded. Fitch senior director Paul Norris told RNZ that the agency had previously taken a constructive view of New Zealand councils because they had wide flexibility to raise revenue. Once that flexibility is fenced in by statute, that comfort fades. Norris said he expected the cap to weigh on credit profiles across the sector. S&P has already lowered eighteen council ratings during 2025 to price in the policy uncertainty. Of the twenty-four councils S&P rates, eighteen had budgeted rate rises above four percent every year through to 2029. Most rated councils have been planning to compound rates well above the proposed cap for the rest of the decade. If the cap holds and exemptions are narrow, the gap must be closed somewhere. The options are cutting services, deferring infrastructure, lobbying harder for exemptions, or borrowing more against a smaller projected revenue base. None of them are friendly to a credit profile, and none of them are friendly to ratepayers in the medium term, because higher council borrowing costs eventually flow through to higher rates or higher user charges.

Mayors have already begun signalling the workaround. Wellington Mayor Andrew Little has said councils may need to raise fees for pools, recreation centres and community facilities. That is rational under the constraint, but it is also a reminder that the cap is a blunt instrument applied to a problem that has its roots in governance rather than statutory law. Councils have grown spending at 2.3 percent real per capita per year in Auckland’s case, with comparable trajectories in most metros, for over a decade. They have done so under the legal framework that already exists, with elected members signing off the budgets, with the public technically able to scrutinise the long term plans, with consultation processes mandated by statute. The fact that this happened anyway is not a problem the rates cap can fix. It is a problem of attention.

Mayoral turnout in Auckland’s local elections has run in the 30 to 40 percent range for over a decade. Councillor races are decided by even smaller fractions of the eligible electorate. Long-term plan consultations attract submissions in the hundreds or low thousands in a region of 1.7 million people. Ratepayer interest is episodic and reactive, spiking when rates bills land and subsiding the moment the news cycle moves on. Councils have grown into that vacuum because the political system rewards them for doing so. Elected councillors are lobbied intensively by the sectors that benefit from council spending, including arts organisations, sporting bodies, cultural institutions, environmental groups, infrastructure consultants, and community organisations of every description. Ratepayers, in the aggregate, are not lobbied. They are billed.

The rates cap is, in the end, a workaround for the limits of local democratic accountability. It will probably constrain rates increases. It will probably not reduce the underlying spending pressure, because the demographic and infrastructure realities that drive council costs are not going away. Auckland’s water pipes are old. Wellington’s are older. Christchurch is still paying down the earthquake rebuild. Queenstown is growing faster than its infrastructure can absorb. The Bay of Plenty is rebuilding from Cyclone Gabrielle. The cap will force trade-offs to be made explicit rather than buried in compounding budget lines. That is genuine progress. It is also a more limited kind of progress than its proponents claim, because the harder work, restoring transparent democratic scrutiny of what councils choose to do with the discretionary half of their budgets, remains undone.

The right next move, if the political appetite existed, would be a Local Government Transparency Act. Standardised statutory budget categories that every council must publish in the same format. A clear line item for every discretionary activity above some threshold, with an explicit statement of the statutory basis, or lack of one, for the spending. Mandatory publication of cost-benefit analyses for any new discretionary spending over a defined size. Five-yearly external reviews of every council CCO and arm’s-length entity, conducted by central government, with statutory criteria for disestablishment. Reform of the consultation process to reach the seventy percent of ratepayers who currently never engage, rather than relying on the self-selecting submitters who do.

None of that is in the rates cap legislation. Some of it may follow in subsequent reform. Some of it will only follow if ratepayers continue to pay attention after the cap passes, which on the historical evidence is not the way to bet. But the cap is, at minimum, a beginning. The first binding external constraint on council revenue growth in a generation. Whether it succeeds depends less on the legislation itself than on whether the public attention that produced it can be sustained. The Taxpayers’ Union petition that built the political pressure for the cap currently has more than 30,000 signatures. The 2025 local elections turfed out fourteen of the eighteen worst offenders. The 2028 cycle will tell us whether that energy was a one-off response to a particularly egregious set of bills, or the start of a more durable rebalancing of who pays attention to local government and why.

What would you like to see councils prioritise inside a binding rates cap, core infrastructure, deferred maintenance, asset sales, headcount cuts, or scrapping the discretionary spending altogether? Have your say in the comments. And while you are at it, take a few minutes with our voting tool to see where each party stands on local government, rates and the wider cost-of-living debate ahead of the 2026 election.

This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂