Christchurch's biggest landowner is getting a discount on rates. Should it?

Saturday, 29 November 2025

Many government owned buildings in Christchurch are exempt from general rates including Canterbury University (left), Princess Margaret Hospital (top right) and Ara.

ANALYSIS: Picture the flashiest house on your street. The owner’s rubbish gets collected every week; water comes out of their taps. Maybe stopbanks on the river protect the house from flooding. Potholes on the road get fixed.

Now picture that neighbour deciding, unilaterally, not to pay most of their rates bill. They get everything you get from the council, but contribute much less, even though they can plainly afford it. Most people would call that a rort.

In practice, that has been the Crown’s position on much of its land for more than 150 years.

Since the 1860s, governments have chosen not to pay rates on many Crown properties.

There's no grand philosophical reason for this. When the original law was passed, there wasn’t much debate — it was simply assumed the Crown was above such things.

That mindset has long been abandoned, but the Crown’s self-declared rates holiday has remained, despite repeated reviews recommending change.

The Press has analysed more than 180,000 property records and sought to estimate the Crown’s outstanding rates bill in Christchurch.

Who Owns Christchurch is a Press data project examining property ownership in the South Island’s largest city.

We found it’s approximately $25 million per year, which is not pocket change. If the city council used that $25m solely to offset rate increases it would equate to about three percentage points. This year’s projected rates increase of 6.6% would fall to 3.6%.

The exemptions that shrink the Crown’s bill

Under the law, roughly 20 categories of land are legally deemed “non-rateable”. That list includes most Crown land, private schools, and land used for charitable or religious purposes.

Land used for these purposes is exempt from the general rate, which makes up most of what you and I pay. An exception is those used for commercial purposes, like Te Pae, which pay full rates.

The rest still face targeted rates – for things like water and sewerage connections – but their overall bill is far smaller than for an equivalent business or household.

Because the Crown is such a prolific landowner, the effect is dramatic. The University of Canterbury, for instance, currently pays just over $2m a year, mostly in targeted rates. If it were subject to a general rate like everyone else, that bill would jump to about $8.8m.

Christchurch Hospital pays around $1.6m a year - a fraction of the $7.3m due to the council if it paid general rates.

Christchurch Hospital pays around $1.6m a year in rates (including a mere $14.66 towards restoring the Arts Centre). Without an exemption, its rates would rise to $7.3m with about $275,000 going to the Arts Centre alone.

Apply the same logic across the city’s 350-odd Crown-owned properties and the numbers scale up quickly.

Why doesn’t the Crown pay rates? The answer is fairly obvious: If you could get away with it, wouldn’t you?

From time to time, politicians have floated the idea of change. In 1998, Local Government Minister Tony Ryall promised to look 'long and hard at the issue' of the Crown paying rates, and suggested the exemptions 'could be scrapped” as part of a review. The law that followed left the exemptions intact.

Independent reviews have been less forgiving. In 2007, the Shand Report concluded the rationale for Crown exemptions was 'unclear' and recommended scrapping most of them. A 2019 Productivity Commission inquiry was explicitly told not to recommend changes to the “particular mechanisms for rating crown land”. Even so, it urged the Crown to “pay for the services it uses”.

What about the GST charged on rates?

If the University of Canterbury paid a general rate, its annual bill would jump from about $2m to $8.8m.

In 2023, the Future of Local Government review went further. It recommended not only that the Crown pay rates, but that the GST charged on rates be returned to the communities that pay it.

For Christchurch, this equates to around $120m a year. If the Crown also paid rates on its properties, those two changes wouldn’t just soften rate increases, they would reverse them.

The expected 6.6% rates rise could instead turn into an 8% cut.

None of these pleas have shifted the dial.

Councils, unsurprisingly, are generally in favour of change. The Christchurch City Council backed the Crown paying rates as long ago as 2007. In 2015, Local Government New Zealand, the sector’s lobby group, released a substantial discussion paper calling for most rating exemptions to go.

Last year, Auckland mayor Wayne Brown joined the cause in his usual blunt terms: “Why should central Government get a free ride? They use our infrastructure but don't pay the bill.” He also backed returning the GST on rates to councils.

Like so many before him, he hit a brick wall. “We will not be reconsidering rates exemptions for certain types of central Government properties at this stage,” Finance Minister Nicola Willis said in response.

Who should pick up the tab?

On this, reasonable people can disagree.

The most generous defence of the current exemptions is that they are largely an accounting trick. Whether money is collected via income tax in Wellington or via property rates in Christchurch, it still comes from the same taxpayers. Shifting the bill from one column to another does not magically create or destroy money.

There is also a practical concern: The Crown risks becoming a convenient cash-cow for councils. Universities and hospitals won’t pack a sad and move if they don’t like a rates bill. In the wrong political hands, it’s not hard to imagine a struggling council effectively taxing the health system to fund a new stadium.

Public schools such as Christchurch Boys’ High are exempt from rates.

Yet in some cases, it does matter where tax is collected. Universities and hospitals are regional facilities, serving people outside of the city’s boundaries.

Under the current rules, a young electrician who has just bought her first home in Mairehau is helping underwrite facilities heavily used by older residents in Rangiora and students from Wellington. The costs are concentrated locally but the benefits are spread widely.

Then there is basic fairness. Hospitals, universities and schools clearly serve the public good, which is one justification for treating them gently. Yet that becomes an argument for even more exemptions. If the hospital doesn’t pay rates, why should a GP clinic?

Don’t mega-ratepayers like supermarkets and retirement villages also provide community benefits?

There is a possible middle ground. In some countries, the Government makes “payments in lieu of rates”. Rather than being fully exposed to the whims of a council’s rating policy, the Crown negotiates to pay a grant to cover its use of council resources.

This issue underscores a simple, uncomfortable reality: central government has been happy to load more work onto councils and let them take the political hit when costs go up.

Against that backdrop, the Crown’s refusal to revisit its own exemptions is a political choice. Wellington expects councils to maintain the roads to its hospitals and universities, to provide the water and stormwater networks, to plan for floods and rising seas – but will not seriously consider paying rates, sharing GST on rates, or otherwise meeting councils halfway.

With more overhauls ahead, the argument over who pays for what – and whether the Crown should keep its special treatment – is unlikely to fade.