More than a dozen councils will have a smaller share of their road bills paid by the New Zealand Transport Agency over the next three years, and the change arrives at the same moment the Government is moving to limit how much those same councils can collect in rates.
The reductions were confirmed to councils this week and reported by RNZ Checkpoint on 4 September. They apply to the Funding Assistance Rate, the percentage the transport agency puts towards every eligible dollar a council spends on local roads, public transport and related work. The agency reviews and resets that rate for every local authority as part of each National Land Transport Programme, a requirement under the Land Transport Management Act 2003. Across the country the average sits at 53 percent, with councils that have weaker rating bases sitting well above it and wealthier ones below.
Tararua District Council currently receives 73 cents towards every eligible dollar. That drops to 72 cents next year and then to 71 cents for the two years after that. Mayor Scot Gilmore told Checkpoint the loss of a couple of cents does not sound like much until it is applied across a very large network.
“It’s going to be close to $1.3 million for our ratepayers… we’ve got to make a decision of whether our ratepayers can afford that and whether we’re not going to be able to invest as much in our roads as what we need to. So it leaves us some really tough choices,” he said.
Gilmore said the district carries an unusual amount of road for the number of people paying for it. “The Tararua district, if you laid our roads end on end, they would go right from the top of the North Island right down to the bottom of the South Island. So we’ve got almost 2,000 kilometres of roading that we’re looking after.”
He said the agency put the reduction down to an increase in the number of rateable units, which he described as very small, and a fall in reported deprivation. “We’re sort of looking into those statistics… we certainly don’t feel that on the ground,” he said. The council intends to write to the transport agency board and the Minister asking for the decision to be reviewed.
Gilmore said the council was left with two unattractive options. “The two choices that we really have in front of us is to reduce investment in our critical infrastructure or to ask our ratepayers to cover the funding cut.” Deferring the work would not save money in the long run, he said. “Because we’ve got such a huge, huge length of roads, over 2,000 kilometres, we have to make sure that we’re investing in those continually. If we take our eye off the ball with that, it’s just going to end up being more expensive for everyone down the track.”
The Far North District Council had gone the other way and asked for its rate to be lifted. It was reduced instead, from 71 cents to 70 cents for the 2027 to 2030 period, which the council put at roughly $1.4 million subject to final checks. Councillor Anne Court said the timing was the problem.
“This kicks in next year from our long term plan which is when rates capping kicks in, so what do we do? Find another $1.4 million from rate payers, or do we cut programmes or reduce levels of service,” she said. “It’s a scary conversation we have to have.” The Far North has the largest roading network in the North Island, with 723 bridges and 28,000 culverts, and about 11 ratepayers for every kilometre of road.
Buller District Council said its ordinary rate would step down from 75 percent this year to 74 percent in 2027/28, 73 percent in 2028/29 and 72 percent in 2029/30. Chief executive Simon Pickford said it was too early to attach a dollar figure, because “the actual financial impact will depend on the size and makeup of our transport programme”. The council did get one piece of good news, with the transport agency confirming the Karamea Special Purpose Road keeps a 100 percent rate through to 2030. Mayor Chris Russell said in a council statement on 3 September that the road was worth protecting. “These roads are essential lifelines for northern Buller, connecting residents, businesses, emergency services and visitors. Had the funding rate been reduced, the cost would ultimately have fallen on local ratepayers or required Council to reconsider the timing and scope of planned maintenance and renewal work.”
The transport agency said councils could raise concerns about the new numbers, but that the rates were set by a national method and questioning them may not change anything. “The FAR’s have been recalculated using updated affordability data to provide a nationally consistent, transparent basis for comparing councils’ ability to meet their share of land transport costs,” it said. It also noted the reductions are limited to a maximum of one percentage point a year so councils have time to plan. Transport Minister Chris Bishop said the Government was not cutting funding, and was instead making “difficult decisions” about rates based on the circumstances of each council.
What makes the timing sharp is the other half of the squeeze. The Local Government (Rates Capping) Amendment Bill passed its first reading on 2 September and would require councils to keep annual rates rises inside a target range of 2 to 4 percent, with water services excluded. Local Government Minister Simon Watts said the Bill was aimed squarely at household budgets. “Steep and unexpected rates increases add pressure to household budgets at a time many New Zealanders are already feeling the squeeze,” he said, adding that “nice-to-haves should never come at the expense of delivering the basics and the days of double-digit yearly rates increases are coming to an end”.
Councils would take the cap into account from 1 July 2027 when writing long term plans, with full effect from 1 July 2029. That is the same window in which the lower funding assistance rates bite. The Bill is now with the Finance and Expenditure Committee, which has asked for submissions by 1 December. Because the Governor-General dissolves Parliament on 1 October ahead of the general election, anything filed after that will be held by the Office of the Clerk and handed to the next Parliament’s committee.
For a rural district with 2,000 kilometres of road and a small rating base, the arithmetic is not complicated. A lower contribution from the national fund and a ceiling on rates leaves the road itself as the only place left to find the money. Whether that trade is acceptable is now a question for candidates in districts where most of the network is gravel, bridges and culverts rather than motorway. If you are still working out where the parties sit, our voting tool lets you compare their positions before you cast a vote.
Does your council face a funding cut, and would you rather pay more in rates or see less spent on your roads? Tell us in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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