Rates up average of 15% across the country – LGNZ
Homeowners across the country are facing average rates rises of 15% as basic infrastructure rockets in price by a third.
Local Government New Zealand commissioned a report by economist Brad Olsen assessing draft long-term plans across 48 councils, which starkly illustrates the cost pressures they are under.
Homeowners will will have to find, on average, $8 more per week to keep up with rates demands.
It also states that between 2002-22, the average rates rise was only 5.7% per year, and rises averaged 9.8% in 2023.
“Councils are acutely aware they need to balance the need for investment with affordable increases, but the pressure has reached tipping point,” said LGNZ vice-president and Lower Hutt mayor Campbell Barry.
The report found that the cost of standard council purchases over the last three years had risen by roughly a third. Bridges are 38% more expensive to build, sewerage systems 30%, and roads and water supply systems 27%.
Barry said income had not kept up. “Councils’ share of overall tax revenue has remained at 2% of GDP for the last 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.
“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.
“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.,” he said. “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.
“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.