Labour rejects government’s rate cap as households face rising costs

The government has announced a plan to cap annual council rate hikes at four percent by 2029, arguing that households cannot keep absorbing steep increases from local authorities.

Labour has come out firmly against the cap, positioning itself on the opposite side of the issue to most ratepayers.

Prime Minister Christopher Luxon said ratepayers are being forced to tighten their belts while many councils continue to spend on “nice-to-haves rather than must-haves”.

He pointed to repeated complaints about rising rates and poor core services. “Ratepayers are tired of having to prudently manage their own budgets while rates continue to go up,” he said.

Local Government Minister Simon Watts said the new framework will limit annual increases to a two to four percent range, tied to inflation at the lower end and GDP growth at the upper end.

Councils that want to exceed the four percent limit will be required to apply to a new regulator and show evidence that higher increases are unavoidable, along with a plan to return to the cap.

A transition period from 2027 will require councils to report on wage costs, infrastructure deficits and other financial indicators as they prepare long-term plans.

Local government spokesperson Tangi Utikere said Labour will vote against the legislation.

“We do not support this rates cap,” he said, adding that current increases are “unaffordable in the long term” but he offered no alternative mechanism for restraining them.

Centrist Ltd.