How Iran war threatens to blow up your rates

Wednesday, 8 April 2026

Councils in New Zealand could be on the receiving end of Iran war impacts if it drags on.

The first impacts of the Iran war on Waikato ratepayers’ pockets is about to hit, with the conflict set to blow up council budgets and push up rates if it carries on.

A delay in striking rates and councils needing more to cover rising inflation, alongside “almost certain’’ council overspends are some of the “serious risks’a new report warns.

And for every 1% extra in inflation generated by the war, ratepayers can expect the same on their household rates demand.

Waikato District Council is due to meet to decide on its Annual Plan budget on Wednesday, comprising a lower-than-expected rates rise of 2.8% - 0.2% lower than first forecast.

Waikato Mayor Aksel Bech is considering impacts from the war in Iran.

However, the staff report to councillors warns the Iran-USA conflict has created “a high level of volatility and uncertainty around several assumptions’’ and the overall ability of the council to achieve its 2026/27 Annual Plan proposed budget.

The same issues are likely to hit all councils as both households and workplaces grapple with sky rocketing fuel prices and their downstream price rises for almost everything else.

“At the time of writing there was no indication the conflict would be resolved in the short-term,’’ the report lamented.

“This conflict is impacting on oil supplies and therefore the derivative production and price of petrol, bitumen and plastics.

For Waikato District Council vehicles travelled 239,579 km annually, using 18,334 litres of fuel at a cost of $29,146. But that would only head upwards.

“It is estimated that every $0.50 per litre fuel costs will increase fuel costs by an estimated $9,000 per quarter.’’

The war is also impacting on assumptions for inflation, interest rates, and other costs within the 2026/27 Annual Plan proposed budget.

The report shows top-end inflation estimates have blown out. .

“The estimate range for inflation has widened from 2% - 3.5% to a much wider range of 2% - 8%. These may impact on interest rates, with mid-term rates having increased.

“A 1% increase in inflation could have an approx. $1.2-1.3 million impact on costs, ultimately flowing to a 1% impact on rates if the increase cannot be absorbed on top of the existing $9 million or 7% of rates savings targets.

“Capital expenditure costs would also increase impacting on borrowings and/or rates.

“These factors, resulting from the ongoing conflict, will almost certainly negatively impact actual results when compared with the 2026/27 Annual Plan proposed budget.’’

The report gives the council two options.

It can either, as recommended by staff, proceed with setting the 2026/27 Annual Plan budget, acknowledging the risk or it can delay setting the Annual Plan Budget while staff sharpen their pencils on the budget.

The second option was not recommended by staff, as it would potentially delay the annual rates strike.

Waikato District Mayor Aksel Bech said the council had specifically asked for the report to detail impacts of the war as it tries to reduce its spending as much as possible.

The council needed to understand the 'long tail' of economic impacts caused by the war as it drags on or “potentially escalates’’ given recent comments, he said.

“Roading is our single largest expense… and between bitumen and concrete it is likely there'll be an impact and we've sort of tried to guess, but it’s really impossible to try to get that right.'

Mayor Bech said the council's formal response to these pressures includes investigating shared services through the Mayoral Forum scheduled for later this week to find regional savings across the Waikato.

The approach differs in its urgency to that being taken by neighbouring Hamilton City Council.

A recent Hamilton City Council report noted while there is a risk that ongoing global instability could impact the council’s baseline assumptions, staff believed “it would be premature to change any of the assumptions at this stage’.

If things changed significantly, there would be time to revise these before the Annual Plan is adopted in June, they said.

Former Hamilton Mayor Margaret Evans has been asking both Hamilton District Council and the region’s new water company IAWAI to take the risks of the war more seriously, claiming it presents an ‘’extreme risk’’ at odds with the ‘’cautiously optimistic outlook” of HCC and IAWAI.

“It is not business as usual. It’s a different world, adding to the urgency for review, innovation, and change to HCC/IAWAI plans as the global impacts unfold,’’ Evans said.