ERIC NESS: THE 4% RATES CAP — NOW WE FIND OUT WHAT COUNCILS REALLY THINK IS ESSENTIAL

For years the council rates debate has followed a familiar pattern. Council announces another increase, ratepayers choke on their coffee, and council explains that everything costs more. Insurance is up, interest is up, construction is up, infrastructure is ageing, roads need repairing and pipes need replacing. Much of that is true.

But there is another part of the story that gets less attention. Councils are also doing far more than they used to.

Most people understand paying rates for roads, rubbish, water, wastewater, stormwater, libraries, parks and the basic services needed to keep a district functioning. Then, somewhere along the way, the list got longer.

We acquired strategies, relationship programmes, climate programmes, housing programmes, economic-development programmes, cultural programmes, community-development programmes, advisory groups, steering groups, partnerships, engagement frameworks and enough action plans to keep several forests nervous.

Some are required by law. Some came from Wellington. Some were created by councils themselves. Some may be very good ideas. But they all cost money, and eventually they arrive together on the same rates bill.

That is why the Government's proposed rates cap becomes interesting. Local Government Minister Simon Watts has been telling councils to get “back to basics” and has said that “nice-to-haves should never come at the expense of delivering the basics.”

That sounds simple enough, until somebody has to decide what the nice-to-haves actually are.

Because almost nothing inside a council is described as unnecessary. Every strategy is important. Every programme delivers outcomes. Every partnership creates value. Every initiative responds to community need. If absolutely everything is important, then nothing has really been prioritised.

The proposed cap could change that. The Government wants increases in specified rates kept within an initial range of 2 to 4 per cent, with exemptions where councils can demonstrate a genuine need to go higher. It does not mean every household rates bill will suddenly be limited to exactly 4 per cent, and it certainly does not remove expensive infrastructure problems. But it does introduce something councils have not always had to deal with quite so sharply: a limit.

And limits have an irritating habit of forcing choices.

If a council says it needs more money because the wastewater system is failing, fair enough. Show us the problem, show us the cost and show us what happens if it is not fixed. If a bridge needs replacing, show us. If stormwater cannot cope, show us. If roads genuinely need millions more spent on them, show us where and why.

Most ratepayers understand that infrastructure is expensive. What they are less enthusiastic about is being told there is no money for the basics while another strategy, programme or advisory structure appears on the agenda.

And this is where Simon Watts' “back to basics” instruction becomes awkward. If roads, infrastructure, water and rubbish are the basics, where does everything else now sit?

What happens to climate programmes, council housing initiatives, relationship programmes, cultural strategies, economic-development schemes and advisory panels? I am not suggesting they all disappear. The question is whether they still rank ahead of the things councils are now being told to put first.

Because “worthwhile” and “essential” are not the same thing.

I might think a new kitchen would be worthwhile. If the roof is leaking, I probably know which one comes first. Council budgeting should not be fundamentally different.

There is also a democratic question here. Did ratepayers ever consciously agree to pay for the size of local government we now have?

Yes, there have been elections, long-term plans, annual plans and consultation exercises. But councils did not suddenly expand through one dramatic vote. It happened gradually. One programme here, another strategy there, another partnership, another staff role, another advisory group.

Individually, each probably sounded reasonable. Collectively, they became a much bigger council. And ratepayers got the combined invoice.

That is where consultation can become a little too comfortable. Ask someone whether they support better housing, environmental protection, economic development, stronger communities and better relationships and you are likely to get plenty of yeses.

Now ask the missing question. Would you still support it if your rates had to increase to pay for it? Would you support the strategy if the same money could repair more roads? Would you support another programme if a wastewater upgrade had to wait?

That is when a pleasant consultation question becomes a real budget decision.

The Far North gives us a good example of what happens when the financial screws tighten. FNDC was initially looking at an average rates increase of around 16.5 per cent for 2026/27. That was eventually brought down to 6.7 per cent after the organisation went back through its budgets.

That does not mean millions of dollars of waste were suddenly discovered. Some spending may have been delayed, assumptions changed and priorities moved.

But something clearly happened.

When 16.5 per cent was staring everybody in the face, the budget received another look.

Funny how concentrating the mind works.

That may be the biggest benefit of a rates cap. Instead of saying, “Here is everything we want to do, now how much money do we need?”, councils may have to start asking, “Here is the money available, what absolutely has to be done first?”

That is a very different conversation.

There are risks, of course. A council could stay under a cap by delaying maintenance, increasing fees, borrowing more or shifting costs somewhere else. That would not be good budgeting. It would simply move the problem.

Central government cannot have it both ways either. Wellington cannot keep giving councils more responsibilities and then complain when councils send out the bill.

But none of that changes the basic principle.

If a council says it needs more than the cap, tell ratepayers exactly why. Show us what is compulsory, what is infrastructure, what is discretionary and what was considered for reduction before ratepayers were asked for more.

Most importantly, show us what “back to basics” actually means when it reaches the budget table.

Perhaps councils will go through this process and prove that nearly every available dollar is already tied up in roads, pipes, debt, regulation and essential services. If so, that is worth knowing.

But perhaps we discover something else. Perhaps councils have simply accumulated too many jobs. Infrastructure provider, regulator, housing facilitator, environmental agency, economic-development body, community-development organisation, cultural institution and strategic partner is quite a list for one organisation.

If communities genuinely want councils to do all of those things, that is a legitimate choice.

But somebody still has to pay for it.

That is why the argument over the 4 per cent rates cap is going to become much bigger than 4 per cent. Simon Watts has told councils to get back to basics. Parliament has changed the direction of local government. Now comes the part that matters: what actually gets cut, reduced or delayed when everything can no longer be treated as equally important?

The real priorities will not be found in another strategy document. They will be found in the budget.

And ratepayers might finally get an answer to a question that has been hanging around for years.

When did we agree to pay for all of this?

Perhaps there is an even better question.

If the Minister says get back to basics, what exactly does council think the basics are?

Eric Ness is the pen name of a Northland-based writer behind Northland Current News, an independent commentary page focused on local government, public accountability and democratic process. Northland Current News examines council decisions, governance structures, public spending and the way decisions are made, with particular attention to whether the public is being given the full picture. The articles draw heavily on council agendas, minutes, official correspondence, meeting recordings and other publicly available material.