Is this the beginning of the end for Wellington rates pain?

Tuesday, 4 March 2025

Late last year, Wellington mayor Tory Whanau and councillors told officers to find a plan to stick to the budgeted rates rise. (File photo)

“Doing it tough” Wellingtonians have dodged a second large rates rise.

Months after suggesting rates might need to rise nearly 16%, Wellington City Council has shaved hundreds of dollars off next year’s bills.

But while the likely rates rise might still be in the double digits – 12.2% – it’s come in below the council target.

Faced with securing billions to replace the city’s ageing pipes and plugging an insurance gap, the council scheduled four large rates rises starting in mid-2023. Halfway through, the average ratepayer is now paying a third more.

Last year’s jump was the most painful: an average 16.9% increase along with the introduction of a 1.6% sludge levy.

Many Wellingtonians are now financially stressed, said Karori residents’ association chair Andrea Skews.

The target for this year’s rates was a 12.8% increase. In late December, the council suggested it could be as high as 15.9%. But a recalculation in February – taking into account new data on falling interest rates and petering wage growth – suggested rates might only need to rise 12.2%.

Councillor Diane Calvert (right) said many Wellingtonians had contacted her and her peers after last year’s rates rise. (File photo)

For an average $1 million home, the revised figure will shave $185 off the annual rates bill. Higher-valued properties will save even more.

Skews said senior citizens and families with young children in particular were struggling to make ends meet.

“Usually, they’re on a very strict budget and something’s got to give,” she said. “It’s going to be heating, it’s going to be food, it’s going to be maintenance.”

Councillor Diane Calvert agreed. “With inflation and with mortgage rates going up, they’re saying: we’re doing it tough.”

The draft 15.9% rates rise shared in December was unacceptable, she said. Although the revised figure of 12.2% “would help”, rates were still rising.

“They’re paying a lot more, and they seem to be getting less for their money.”

Calvert attempted to get council officers to draft an additional budget where rates would rise by no more than 10% from July. She wanted that option presented to the public alongside the plan for the 12.2% rise, though her motion was voted down.

“We’ve got to be transparent with the people who are paying the bills.”

The council borrows money to pay for capital projects such as the strengthening of the Town Hall, though the cost to service the loans impacts city rates.

The council’s day-to-day operating costs – including interest payments – are paid for through rates. Some of these, such as the money it pays Greater Wellington Regional Council for water, are rising.

But it borrows money to pay for big projects, such as the Town Hall strengthening. The council also had to borrow millions to cover revenue shortfalls during the pandemic, a sum it is currently paying back.

Raina Kereama – the council’s financial planning and partnering manager – said, like many mortgage owners, Wellington City Council pays a limited-term fixed rate of interest on its debts. As interest rates fall, the cost of servicing council debt will follow suit as these loans roll over.

Council officers included “updated assumptions” – a normal step in the annual budget process – to revise the likely rates rise to 12.2%, Kereama said.

The assumptions, such as data on future interest rates, would be updated again before the budget was finalised in June, she said.

The outlook for next year is comparatively rosier, with a projected end to double-digit rates rises. In mid-2026, rates are estimated to rise roughly 8%, followed by 9% for the two following years.