Would rates caps fix the problem?
Simply capping future rates rises seems an easy, straightforward solution to an escalating problem – but one with unintended consequences, I fear, as promoting rates caps is essentially promoting “corner cutting” and short term solutions.
The fiscal problems that most local governments face in New Zealand are structural – they cut to the core of their basic business model of providing and maintaining expansive infrastructure networks for not very many rate payers.
To fix this, we need to invest in better, more efficient infrastructure (well-designed intensification) that reduces the cost burden per rate payer in the long term.
This has not been done for at least the last 50 years (ironically to keep the immediate rates lower). Instead, councils throughout New Zealand took the bait of short term windfalls through urban sprawl that is now coming to haunt us, as the dispersed networks are simply too expensive to maintain.
Operational savings are peanuts by comparison.
For example, losing 100, nearly 25%, of Tasman District Council’s employees, at a salary of say $50,000 each, may yield savings of $5 million per annum (maybe a bit more if including managerial positions) – $75 million over 15 years. Yet, TDC would also have less expertise and work force to get stuff done, might need to assign more work to external contractors (which immediately reduces the savings) or residents might face decreased service levels.
I estimate that over the last 15 years alone Tasman spent $380 million more on dispersed infrastructure networks than would have been necessary to service the same number of dwellings in a more efficient layout.
So anyone promoting rates caps is promoting either much more urban sprawl to chase quick wind falls (with the known long term consequences that we are already experiencing), service cuts or financing operational expenditure through debt, fees or charges.
TDC is currently so desperate that it is doing all of the above. Urban sprawl at Mapua, Hope, Brightwater and Wakefield, flip flopping on essential service cuts like rubbish bins and library hours, increasing fees across the board and taking on more debt to pay for operational cost overruns, the interest burden of which already amounts to the equivalent of one new public swimming pool per year! Yet, it still needed to raise rates by nearly 9%.
This is the opposite of fiscal responsibility – it is reckless (and with the kitty already empty, this leaves our region exposed to the risk of not being able to pay for any unexpected costs e.g. from natural disasters)! I am absolutely in favour of fiscal responsibility, making sure that any investments pay a long term dividend for rate payers and this also means eliminating wasteful spending.
But campaigning on a platform of rates caps may actually achieve the opposite – and that’s why I won’t.
Also read Hayden Donnell’s “Rates rises are due to people voting against rates rises“, The Spinoff, 10 July 2025