Hamilton City Council braces for spending clampdown in face of rates cap

Wednesday, 3 December 2025

Hamilton’s new mayor has signalled tough times ahead as the city council scrambles to deal with the Government’s upcoming rates cap.

Tim Macindoe said rates in New Zealand’s fastest growing city would change, although he warned it would take “incredibly hard” work.

This follows the Government announcement it will cap rates rises throughout the country by 2029, limiting increases to 4% per year.

The figure falls far below the annual rates rises laid out in the council’s current long-term plan.

The rates jump currently set for the 2028-29 financial year is 12.5%, more than triple the upcoming limit.

Macindoe said the plan would change, with the council already looking at how to lower costs.

Significant savings could hopefully be found in IT due to technological advances, he said, while a smaller-scale example could be upping the fees for international visitors to the Hamilton Gardens.

He hoped to be able to announce a reduction in rates rises by Christmas, while the next annual plan would be in place next June.

“Once we've got the annual plan locked in, the really tough job will be getting the new long-term plan to fit in with the Government's rates capping direction.”

The Government model would set a target range for annual increases, based on long-term economic indicators like inflation at the lower end and GDP growth at the upper end.

The suggested target range was between 2-4%.

Although the cap would apply to rates, it would not apply to water charges and other non-rates revenue like fees and charges.

Rates rises have been an ongoing issue at the council, which was described in a recent report by international credit ratings agency Standard and Poor’s as “among the most indebted subnational governments we rate globally”.

Debt was about 300% of operating revenue in the 2025 fiscal year, the report said.

Macindoe was unsure about the prospect of any rates cap exemptions for high-growth councils.

To increase rates above the capped limit, councils would need the green light from a Government-appointed regulator.

While the council would probably need to take this step, it would involve showing the Government what had already been achieved, Macindoe said.

“They're not likely to look at any application from us until they've seen progress on our part.”

At least three-quarters of council costs were for infrastructure, an area of high inflation that was needed to meet the demands of population growth.

It was “horrendously expensive” and finding alternative sources of funding was one of the major upcoming issues.

Figures supplied by the council put the average capital spend in the five years to 2020 at $120 million annually.

However in the five years to 2025 the figure had increased to $280 million.

The most recent long-term plan projected the need for an annual average of $410 million for the next five years.

It was a challenging time to become mayor, Macindoe said.

However he expected the rates capping announcement would be popular with those forking out.

“I just want to assure our ratepayers that my commitment to focus on city essentials and to be as cost effective as possible to reduce the burden that they're all experiencing is undiminished.”

This was the mandate he had been elected on, he said.

Incredibly hard work would be needed to achieve some of the savings expected by Wellington.

“We will have to lobby central government very closely to ensure that they work with us to enable us to make this transition, without causing enormous pain or deferring things that will just add costs to future councils.“

While the rates cap would take full effect by 2029, councils would enter a transition phase to adapt to the change from the beginning of 2027.

Consultation with stakeholders was now underway until February, with legislation set to follow later next year.