Councils say they can’t support a one-size fits all rates cap and warn the impact of all Government reforms haven’t been adequately factored in to the Government’s proposal.

Ashburton District Council has approved its submission on the Government’s proposed rates target model, with the Selwyn District Council to retrospectively sign off its submission on Wednesday.

Both submissions oppose the rates cap model, warning it risks underinvestment, declining services, and long-term financial damage.

Ashburton submission suggests the cap model is impractical and inflexible, is poorly aligned with other local government reforms, and calls for roading to be excluded.

Ashburton Mayor Liz McMillan said the council is committed to only increasing rates when necessary.

“That means - to maintain essential services, renew and protect infrastructure, respond to growth, meet community expectations, and comply with legislation.

“But we’re not yet convinced that a one-size-fits-all national rates cap would be able to account for the needs of different communities.”

The submission argues that the model’s economic indicators, particularly GDP and CPI, are unsuitable anchors for a national cap.

Roading be excluded from the rates cap due to its essential nature and existing national investment oversight.”

At the council meeting on February 4, Cr Phill Everest was the only councillor to oppose the submission as he believed roading should be included under the cap.

“Why would you have a rate cap if you only have an arbitrary rate cap on a few items.

“It doesn't keep discipline on the roading costs, which is actually what the rate cap is I guess supposed to be doing.

“I can't agree with pulling things out and saying no that doesn't apply to rate cap. I think the purpose of a rate cap is just people to live within their budget.”

Deputy Mayor Richard Wilson countered Everest’s point by suggesting the council’s roading budget already “has a lot of checks and balances against it” as it is subject to three-year NZTA funding cycle to receive subsidy.

Cr Tony Todd had said rates capping is “obviously well supported by the voting public and is a great topic” for an election year, but risks leaving councils without the money to meet government expectations. He said it reflects a “we know best” approach from the Government that suggests a lack of trust in local authorities.

Selwyn’s submission states the proposed rates cap model is “unrealistic, unsustainable, and misaligned” with real council cost pressures, especially for high-growth districts.

The proposed 2–4% cap “is a blunt instrument” and would reduce Selwyn’s rates revenue by an estimated $957m between 2026/27 and 2033/34, which risks undermining infrastructure delivery, service levels, and long-term financial sustainability.

Local Government NZ President Rehette Stoltz said the propose cap model will leave councils without the means to meet any additional responsibilities under the Emergency Management Bill.

It’s estimated the Bill will cost local authorities $82.8 million over the first four years to implement - not including costs to meet higher standards the legislation could impose.

It comes alongside other reforms, such as changes to the resource management system that will cost $870 million to establish and administer.

“We support a strong Emergency Management system but there is a risk the Bill's objectives will be undermined unless we have a clear conversation about how we pay for it as a country.

“Otherwise, councils will also be forced to trade off proactive measures like flood defences and stormwater upgrades against other pressing responsibilities.”

The Government is consulting on its rates target model as it plans to introduce a rate cap system by 2029. It plans to have a transition period, beginning January 1 2027, for councils to begin factoring rates caps into long‑term planning processes.

By Jonathan Leask