Rates to rise 30% over 3 years

Insurance, interest and inflation costs are hitting the Christchurch City Council hard as it tries to balance the budget while also making room to pay for the new $683 million stadium Te Kaha.

The financial pressures facing the council are not isolated to Christchurch, with many other across New Zealand already signalling double-digit rates rises, including Hamilton, which is forecasting 25.5%.

At the moment, the Christchurch City Council’s rates increase is sitting at 13.3% for the 2024-25 financial year, including 5.3% for inflation and insurance and 3.5% for Te Kaha.

It is also looking at 10.3% for the following year and 5.2% for 2026-27 – a cumulative increase of 31.5%. A 13.3% rates increase would amount to an additional $448 a year, for the average property worth $764,364.

The figures were released yesterday as part of a public briefing on the council’s 10-year budget, the long-term plan (LTP).

The council is also planning on charging business rates on any residential property that is used for unhosted short-term accommodation for more than 60 nights a year.

Another scheme that is likely to feature in the draft LTP is charging owners of poorly maintained vacant land in four suburban centres – New Brighton, Lyttelton, Sydenham and Linwood Village – higher rates. The scheme already operates in the central city.

Councillors were asked at the briefing to give staff a steer on what rates increase to work towards before approving the draft plan for public consultation in February.

Mayor Phil Mauger said he wanted staff to look at a rates increase of between 9% and 12% for the 2024-25 financial year.

During the 2022 election campaign, Mauger promised to keep rates increases below inflation for his three-year term. Annual inflation is sitting at 5.6%.

The rates could increase to 19% if the council accepted $44m of requests for additional funding from external and internal groups, including economic development agency ChristchurchNZ and events company Venues Ōtautahi and a possible reduction in dividends from its investment company.

The council’s new head of finance, Russell Holden, said to achieve a 12% rates increase the council would have to find $9m in operational savings, which would be challenging.

Dropping the increase to 9% would require $30m of savings, which Holden labelled as “extremely difficult” to achieve.

It is not clear exactly where savings would be found, but staff warned “some hard decisions” would need to be made.

Mauger said in October cuts to libraries and swimming pools were on the cards, but Holden also said the public had told the council they wanted it to retain services and maintain assets.

The council ended up asking staff to plan for a rates increase of between 9% and 12%, plus the additional 3.5% for Te Kaha.

Councillor Sara Templeton, who suggested the Te Kaha separation, said she was concerned about the amount of angst in the community about rates increases, but pointed out that about 75% of the 30,000 people who submitted on the stadium were in favour of the council spending additional money to build it.

“We were super-clear with people that it would mean rates increases and we said how much they would be. People around the table at the time said it would not mean other cuts.”

Templeton was concerned the council would not have enough money to adapt to climate change and was worried the state of the city’s water infrastructure would go backwards if it was not funded adequately.

Her idea to separate out Te Kaha, was supported by unlikely ally councillor Aaron Keown - the pair rarely agree on anything.

Keown said the “nice, big, shiny thing being built” should absolutely be separated out from the rest of the rates increase.

He also wanted the council to write to the Government requesting it put in place a regional rate so residents in neighbouring districts also contributed toward the stadium cost.