New Zealand homeowners are facing whopping rates increases as councils across the motu battle with inflation and high interest rates.
Homeowners are staring down average rises of 15 percent according to data in draft long-term plans across 48 councils, averaging about $8 more per week* per household.
A new report by leading economist Brad Olsen, which was commissioned by Local Government New Zealand (LGNZ), starkly illustrates the pressures councils are under with huge increases in building and interest costs.
For example, over the past three years the cost of building bridges has shot up by 38 percent, while sewage systems increased by 30 percent and roads and water supplies jumped by 27 percent.
Councils are also seeing increased costs for maintaining existing assets and services because of inflation, higher interest rates and increasing insurance and audit costs.
The report revealed the average annual rates rises between 2002 and 2022 were around 5.7 percent per year with the average rate sitting at 9.8 percent in 2023.
"Councils are acutely aware they need to balance the need for investment with affordable increases but the pressure has reached a tipping point," LGNZ's Vice-President Mayor Campbell Barry said.
"Councils' share of overall tax revenue has remained at 2 percent of GDP for the last 50 years, despite our ever-increasing responsibilities."
Barry added on top of increasing costs for existing assets and services, councils are dealing with new issues that require new spending.
"Many households pay $2-3000 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," Barry said.
"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.
"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."
Barry said councils "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."
Proposed rate rises across the board are high but some homeowners, such as those in Hamilton, are in for a nasty surprise.
Buller District Council is proposing a whopping 31.8 percent rates increase, while Hamilton City Council wants to increase rates by 19.9 percent.
Greater Wellington Regional Council, Wellington City Council and Dunedin City Council are also proposing hefty increases of 19.8 percent, 16.4 percent and 17.5 percent respectively.
Hutt City Council, meanwhile, is proposing a 15.9 percent hike, while Tauranga City Council is proposing a similar increase of 15.8 percent.
Christchurch City Council wants a 13.3 percent increase, while Masterton District Council is proposing a 9.3 percent increase and Aucklanders are facing a 7.5 percent increase.
Overall, it's shaping up to be an expensive year for homeowners in Aotearoa.
This story has been edited to update and correct Hamilton City Council's proposed rates increase.
