Voters back rates cap – but fear essential services will pay the price
Sunday, 18 January 2026
Voters overwhelmingly back the Government’s plan to cap council rate increases, a new national poll shows – but many also believe the policy will force councils to cut essential local services.
The latest The Post/ Freshwater Strategy poll with Infrastructure New Zealand found a clear majority of voters support a proposal to limit annual rate rises to between 2 and 4% from 2029.
The average rates rise in 2025 was 7.4%, with ratepayers in some regions facing double-digit increases in recent years.
Amid the hikes came headline-grabbing council cost blow-outs, from Wellington’s sewage sludge treatment plant, now expected to cost more than $500 million, to Christchurch’s new stadium, which has surged to as much as $683m. Auckland’s City Rail Link has blown out by more than $1 billion, with Auckland Council responsible for half the overspend.
Read More:
Who is up and who is down as Parliament wraps up for the year?
What you are saying about the Government’s proposed rates cap
Against that backdrop, voters appear keen to rein in council spending. But the polling suggests enthusiasm for restraint sits uneasily alongside anxiety about what councils may be forced to cut.
When asked about the likely impact of a rates cap on local services such as libraries, public transport and community facilities, 44% of respondents said services would probably stay the same. A third – 34% – expected them to get worse, while just 8% believed services would improve.
Almost half of all voters, 48%, agreed that a rates cap would force councils to cut essential services. Only 21% disagreed, with a further 21% neutral.
Even so, voters leaned clearly toward financial restraint: 53% said they would prefer to keep the rates cap even if it meant a reduction in services. Thirty-six per cent said they would rather allow rates to rise above the cap to maintain existing service levels.
The poll also suggests openness to alternative funding models if councils are constrained. Nearly half of respondents – 47% – supported introducing user fees for public facilities to offset limited rate increases. Twenty-five per cent opposed that idea, while 21% were neutral.
Tauranga mayor Mahé Drysdale said the policy raises practical concerns for high-growth cities. The city faces a 6% hike next year just to cover depreciation and interest on new infrastructure, he said.
“That means we have to reduce services elsewhere to get down to the 2–4% band.”
Drysdale points out that the median household pays over $40,000 a year in tax to central government, roughly 10 times what they pay in local rates. But the Government is reluctant to countenance taking GST off rates, a move that would return around $1 billion a year to local communities.
“If the Government were really serious about saving ratepayers, the best thing they could do is actually take 15% off the rates every year… which effectively is a tax on a tax, because rates are effectively a tax,” he said.
“Do central government give you 10 times the service that local government does? I would certainly argue that they don’t… If we’re going to have this conversation, let’s have a revenue conversation and ask whether central government should share some of that tax more freely with local communities.”
Drysdale said the trade-offs from a rates cap need to be understood.
“Ultimately, things have to be paid for. You either pay through rates, through user charges, or you don’t do it. Boat ramps charges are very unpopular…parking is another. Those are direct user charges we’ll have to consider if rates can’t fund them.”
Infrastructure chief executive Nick Leggett said the results highlight a fundamental flaw in the way local government is funded. “It suggests New Zealanders are really doing it tough financially, but they’re prepared to back a policy that they know is likely to cut essential services.
“That’s why we’ve got to grow the economy and invest in infrastructure. New Zealand has to grow its way out of the current financial predicament.”
Leggett warned a rates cap could have long-term consequences for councils’ ability to maintain and respond to critical infrastructure. “If rates capping reduces local government’s ability to look after and maintain what’s already built, we’re going to have an even bigger infrastructure deficit. That’s bad for communities and it’s going to cost more in the long run,” he said.
He also flagged the risk to emergency response, noting that climate events are increasingly frequent. “When a road is washed out by a flood or banks collapse blocking access, we want councils to be able to react quickly. Restricting their ability to spend compromises that,” he said.
Leggett suggested that voters may be underestimating the impact of a hard cap. “Rates capping will make it much harder to invest in the $200 billion infrastructure deficit we already face. A third of public infrastructure assets are in poor condition, and councils simply don’t have the money to replace them.”
What do you think? Email sundayletters@stuff.co.nz. Please include your full name and address.
Freshwater Strategy interviewed n=1,031 eligible voters in New Zealand, aged 18+ online, between 5-10 December 2025. Margin of Error +/- 3%. Data are weighted to be representative of New Zealand voters.
The Post/Freshwater Strategy poll is funded by Infrastructure NZ to encourage debate about issues that are important to the future of New Zealand.