Rates cap will force tough decisions as Christchurch councillor suggests selling Enable

Tuesday, 2 December 2025

Capping rates increases to 4% will lead to some tough calls for councils, as one Christchurch city councillor proposes selling fibre broadband company Enable to free up cash.

The Government announced on Monday its widely anticipated plan to force councils across New Zealand to limit rates increases.

Councils will not be able to increase rates beyond 4% unless they have permission from a regulator appointed by central government.

The announcement received a mixed reaction with some saying it is “lazy politics” that will cause asset sales while others want it to come into force sooner.

Christchurch City Council’s finance committee chairperson Cr Sam MacDonald said a 4% increase would allow the council to spend another $30m each year, but with a projected rates increase for next year sitting at about 9% it would have to find about $35m in savings.

“There will have to be some tough calls, there’s no two ways about it.”

The Government is giving councils until 2029 to fully enact the new rules, but it has told them they should not wait until then to control rates increases. From 2027, councils will be required to consider the caps in their 10-year budgets.

MacDonald said the council would be doing a line by line review of its costs and would have to look at either cutting services or it could look to its investment company Christchurch City Council Holdings Ltd (CCHL), which owns companies including the airport, Lyttelton Port, Orion and Enable.

“Now is the time to have that conversation. I guess nothing is off the table.”

MacDonald said Enable’s value had lifted massively and he reckoned it could have a market value of about $1 billion.

He is proposing the company be sold, and some of the money used to reduce CCHL’s $2.4b debt and the rest be put into a protected investment fund.

“It’ll be a pot of money that continues to grow for the city.“

The council would take a return out of the fund each year, but it would be maintained at a certain level, he said.

MacDonald believed CCHL could reduce its interest costs by about $20m a year and that money could also go back into increased dividends for the council.

The council would be “irresponsible” if it did not look at something like that, he said.

However, the Public Service Association's national secretary Fleur Fitzsimons said rates caps will 'backfire', calling the proposal 'lazy politics' that will cause asset sales and hurt communities more than the status quo.

'This is a sledgehammer to crack a nut. It doesn’t fix the fundamental problem that councils don’t generate enough revenue,' she said.

Fitzsimons said councils needed other funding tools like GST revenue sharing or tourism levies to support the needs of their districts, not their wants.

The Government said the cap would apply to general rates, targeted rates and uniform annual charges but will exclude water charges and other fees and charges.

So, councils could increase water charges and other fees and charges above 4%.

Christchurch mayor Phil Mauger was not available to comment on the rates cap on Monday.

But, council chief executive Mary Richardson said the council took a highly prudent approach to expenditure and carefully weighed the impact on ratepayers.

“Long‑term planning and financial discipline are central to our decision‑making and we will work to ensure rates remain fair and sustainable without waiting for new regulatory models.”

Selwyn mayor Lydia Gliddon said she was concerned Selwyn’s roads would be hit hardest by rates capping.

“The price of bitumen [a binder primarily used in asphalt] has gone up 30%, how do we deliver our roading maintenance?'

Gliddon said caps were a “knee-jerk reaction” to the issue of increased local government spending, but capping was not going to fix the inefficiencies of councils which is part of the rates hike story.

Maintaining infrastructure and protecting roads, water, parks, and community facilitates was essential, Gliddon said.

Selwyn's rates increased by 14.9% last year and 14.2% this year.

Infrastructure New Zealand chief executive Nick Leggett said rate capping must not come at the expense of desperately needed infrastructure and said the policy risked weakening councils at a time the country needed stronger infrastructure.

“How are councils going to pay for new infrastructure or fix what they’ve already got when their primary funding tool is being restricted without any credible alternatives being offered?”

Meanwhile, The Taxpayers’ Union said the cap should come into effect sooner, and ACT leader David Seymour said a cap wouldn’t fix councils “that refuse to control their own spending”.

Local Government Minister Simon Watts said the model set a target range for annual rates increases, based on long-term economic indicators like inflation at the lower end and GDP growth at the higher end.

The lower end of the range is designed to ensure councils can maintain essential services, while the upper end balances the need for sustainable growth with keeping rates increases affordable.

“Analysis suggests a target range of 2 to 4 per cent per capita, per year. This means rates increases would be limited to a maximum of 4 per cent,” Watts said.