Luxon indicates rate capping law is imminent

Monday, 1 December 2025

Annual inflation has hit 2.7%, driven largely by a 12.5% rise in council rates. The finance minister says rate caps may be needed, citing a $2.3m rainbow-lit toilet block as a cautionary tale.

The Government will have something to say about capping council rates “very shortly”, Prime Minister Christopher Luxon says.

On RNZ on Monday, Luxon confirmed that he thought rates caps were necessary.

The local government system wasn’t working, and needed to be re-set. Part of that process was last week’s move to remove regional councillors, Luxon said.

“The bottom line is that councils need to be focused on the must-do, not the nice-to-do stuff.

“You can’t have inflation at 3% and rates going up, up over 12%. That’s just not acceptable.

A protest against council rates in Tauranga

“So we are going to introduce rates caps because it’s important that we do so, so that we can actually help people with their cost of living,” Luxon said.

He added it was expected councils would have to issue fewer resource consents as a result of planning reforms.

Asked if rates caps would restrict communities making decisions in their best interests, particularly as planning reform was also on the way, Luxon said: “No, we’re just making sure that councils are focused on the must-do stuff, that they can continue to invest in infrastructure that they need.”