Taupō District Council preparing for rates capping before 2029

Taupō District Mayor John Funnell says Taupō District Council has already begun planning for operating in a rates cap environment and believes it is feasible that Council can keep rates below the cap.

However, he is warning that some trade-offs, such as project cancellations and changes to council services will be unavoidable if the council is to remain at or under the maximum rates increase of 4 percent annually.

Local Government Minister Simon Watts announced this week that from 2029 councils will be subject to a rates cap of between 2 and 4 percent. Charges for water services will remain separate and will not be subject to the rates cap.

Government has also included an exception process for councils that need to raise rates above the cap for reasons of financial prudence. Recovery from events such as natural disasters could also be reasons to request an exception.

Mr Funnell says the council had already begun planning for a rates cap in recognition of the fact that the community is facing affordability pressures. Council will be seeking to stay within the maximum rates increase cap of 4 percent even before the mandatory date of 2029. Staff will report progress to Council monthly, through Council’s performance report.

However, he said that as the Long-term Plan 2027-37 process gets underway, residents need to be prepared to seriously think about the trade-offs that will inevitably come with a council rates cap while continuing to deliver the services that people value.

“Infrastructure construction inflation has continued to remain high, and councils have very few levers they can use to fund investment without rates,” Mr Funnell said. “That will be a challenge for us to consider and understand as we work through the Long-term Plan process. We should not underestimate the impacts a rates cap could have on our ability to maintain current levels of service - something will have to give.

“There will be difficult choices to make and it will be important that our community helps shape those decisions and understands the trade-offs involved.”

Council acting chief executive Sarah Matthews says the council made a submission to central government earlier this year raising some important points that needed clarifying. She is pleased to see that the government has included Taupō’s suggestions into the proposed legislation, including the use of a formula that factors in ratepayer growth, instead of permanent population.

“Government has based the calculations on average increases per ratepayer rather than a formula that includes population growth. This is a fairer measure for councils such as Taupō that have a high proportion of holiday homeowners relative to the number of permanent residents,” Mrs Matthews says.