The gap between survivable and solvent
Waitaki District Council has done something unusual for local government. It has told the truth. In April, the council voted 6-4 to consult on a 19% rates increase for 2026-27, costing the average ratepayer an extra $13.15 per week. But the council’s own documents describe that figure as both the preferred option and explicitly “not sustainable.”
The options on the table are 19%, 27%, and 45%. Only the last one balances the books. Councillor Sven Thelning was blunt: “strictly based on the financials they should be going for a 45 percent increase.”
That 26-percentage-point gap between what is financially necessary and what ratepayers will tolerate is not a Waitaki problem. It is the local government model laid bare.
Seven years of pretending
Waitaki’s chief executive Alex Parmley told the Otago Daily Times the council had run an unbalanced budget in all but one of the past seven years, creating “unintended consequences” and forcing a game of “catch-up” on ageing assets. The council has unfunded $9 million of depreciation for water assets in each of 2025-26 and 2026-27, while facing $37 million in water capital works for 2026-27 alone.
Councillor Frans Schlack acknowledged the obvious: rates had been “kept artificially low for a couple of generations.” Ray Henderson, chair of the Oamaru Ratepayers and Residents Association, put it more sharply, saying the council had long tried to keep rates low and “that had now come back to bite current ratepayers.”
Mayor Mel Tavendale offered sympathy without solutions: “We are really aware that we are doing this at a time when our community is already hurting.”
Waitaki is not isolated. Clutha District Council is consulting on a 20.6% average increase for the same year.
The national numbers are worse than you think
The Office of the Auditor-General’s 2025 review of long-term plans found that across 58 councils, total annual operating expenditure is forecast to rise from $16.2 billion to $23.2 billion by 2033-34, a 38% jump. Interest expenses alone are forecast at $21.5 billion over 2024-34, more than double the previous decade’s forecast and consuming 17% of rates revenue.
NZ Herald analyst Nick Clark captured the mood in late April: “New Zealand ratepayers are being mugged by reality. After an average 12% rates increase last year, dozens of councils are imposing another round of double-digit hikes. Yet the pipes still leak, the roads still crumble and the bills keep climbing.” His conclusion was stark: “The old model, where councils could muddle through and keep hiking rates, is dead.”
In April 2024, BusinessDesk infrastructure editor Oli Lewis noted that from 2009 to 2022, council debt rose 226% while revenue grew only 42%. The infrastructure renewal backlog nationally now sits at an estimated $47.9 billion.
Caps won’t save you, they’ll shift the cost
The government’s proposed rates cap sounds like relief. Federated Farmers’ Sandra Faulkner argues it may be the opposite. Writing in March 2026, she warned that “so severely straight-jacketing council budget decisions that vital infrastructure upgrades and maintenance are delayed or cancelled” was not a solution. When councils cannot raise rates, they raise fees. Resource consents, building consents, food outlet inspections, compliance charges – all become the pressure valve.
With rates already making up 57% of total operating revenue for local authorities, the room to absorb a cap without cutting services or shifting costs is minimal.
In August 2024, the NZ Initiative argued that “numerous government reviews and inquiries have been held over the past 25 years. Yet almost nothing has changed, except for ever higher rates bills for residents, businesses and farmers.”
What business owners are actually paying for
Commercial and industrial ratepayers already pay higher rates than residential properties. Double-digit annual increases compound viciously on a commercial rates bill. A business paying $30,000 in rates last year faces $35,700 at a 19% increase, and nearly $43,500 at the 45% figure that actually balances Waitaki’s books.
The legitimacy problem is not that rates are rising. It is that they are rising into a visible deterioration of the assets they are supposed to fund. Councils spent decades deferring maintenance to keep rates palatable, and now the bill has arrived at the worst possible moment, when businesses are already squeezed by insurance costs, compliance burdens, and weak consumer demand.
Otago Regional Council deputy chair Kevin Malcolm has called for amalgamation of Otago’s six district councils, arguing small councils simply cannot sustain the infrastructure burden independently. Whether that happens or not, the trajectory is clear. Business owners will keep paying more, for less, until someone forces structural change that no government in 25 years has been willing to deliver.
Sources
- Waitaki residents facing 19 percent rates hike (2026-04-17)
- Three rates options include 45% increase (2026-04-29)
- ‘Really worried’ about community over rates rise plan (2026-04-15)
- Council to consult on 19% rate rise for 2026-27 Annual Plan (2026-04-14)
- Part 2: Trends in councils’ financial and infrastructure strategies — Office of the Auditor-General (2025)
- Rate hikes and reforms force councils into tough decisions — Nick Clark (2026-04-29)
- The trouble with capping rates (2026-03-03)
- Rethink needed on council funding (2024-08-01)
- When it comes to rates bills, the only way is up (2024-04-10)