$4000 vs $34: Mayors push rival scheme to rates cap
Sunday, 14 June 2026
A coalition of mayors and independent financial experts is urging the Government to greenlight a nationwide scheme that they claim could deliver up to $4000 in immediate cash-flow relief to eligible households – far outstripping savings promised by the Government’s proposed rates cap.
In a newly revealed letter to Finance Minister Nicola Willis, mayors including Auckland's Wayne Brown, Wellington's Andrew Little and Hamilton's Tim Macindoe expressed “strong ongoing support” for the Ratepayer Assistance Scheme (RAS).
They want the Government to formally back the scheme and begin its roll out.
The push comes as the Government prepares to introduce legislation for a rates cap before the next election. It would come into force in 2029.
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Proponents say the cap will keep local council spending in check, but figures from official advice suggest the cap will only save the average household about $34 a year.
By contrast, RAS advocates argue their scheme offers a much more powerful cushion against cost-of-living pressures.
What is the Ratepayer Assistance Scheme?
A proposed council-backed lending programme that would allow homeowners to defer rates payments and water charges and access low-cost finance for home improvements, while giving developers the option to delay some council charges.
It is initially proposed for those aged 55 and older.
Supporters say it would ease cost-of-living pressures and encourage housing development, with repayments spread over long periods rather than paid upfront.
Those behind the scheme believe it could offer longer-term finance at interest rates around 2 to 2.5 percentage points below comparable floating mortgage rates. Loans would be secured against the property and repaid over time or when the property is sold.
While $4000 is the nationwide average used in the scheme's business case, the cash injection would be higher in areas like Auckland, where the average residential rates bill currently sits at $4068.
(The $34 figure represents the projected annual savings for an average household under the Government's rates cap, which official advice has put at $2.79 per month.)
There would be no impact on council debt limits as councils are fully paid upfront and the financing is off-balance sheet for councils, they argue.
The letter was signed by 20 local government leaders, representing 19 mayors and one regional council chair. That also included Mahé Drysdale, from Tauranga City Council, New Plymouth’s Max Brough, Grant Smith of Palmerston North, Hutt City’s Ken Laban and John Glover of Queenstown Lakes District Council.
Little says the scheme would effectively “unlock equity in your property that you can draw on,” allowing households to spread rates payments over time rather than face upfront costs.
He says it would be particularly useful for people on fixed or lower incomes who expect to sell their home within a set period, allowing them to “accumulate your rates over that period until you sell the property”.
Little says the scheme would also support home upgrades such as solar and heat pumps. “If you're doing things like putting in place solar energy, heat pumps, that sort of thing, then you use your equity in your property to do that and manage the cost of that over time.”
Politics ‘working against it’
But he suggests politics may be working against it. “I expect the politics for the Government is easier on a rates capping scheme… as opposed to a scheme that provides relief to ratepayers, but looks like it allows councils to sort of just spend as they wish.”
He says that framing is misleading. “The problem with the rates capping scheme is it creates uncertainty… we have a massive programme of work to make Wellington resilient… that becomes much harder in a rates-capping environment than under a ratepayer assistance scheme.”
Little says there is strong cross-party interest in cost-of-living relief. “Every politician, regardless of the colour of their stripe, knows that dealing with the cost of living is the foremost issue for most New Zealanders.”
The policy has been in development, by several metropolitan councils, sector lobby group Local Government New Zealand, and the Local Government Funding Authority.
It has already undergone a three-month independent review by a Strategic Advisory Group consisting of Nelson mayor and former National party cabinet minister Nick Smith, ex-ANZ chief economist Cameron Bagrie, and one-time PwC partner Stuart Henderson.
In a separate letter to local government minister Simon Watts, the advisory group endorsed the business case as “conservative, robust and compelling,” noting that operational risks are low and manageable.
They compared the potential success of the RAS to the creation of the Local Government Funding Agency (LGFA) 15 years ago, which has delivered hundreds of millions of dollars in financial benefits to local communities.
The scheme was endorsed by Watts last year and is backed by Labour and the Greens. The Energy Efficiency & Conservation Authority (EECA) and Rewiring Aotearoa have also publicly confirmed their support.
But it can’t progress without government support.
According to the refreshed business case currently with the Government, it needs $6–7 million in establishment equity, a standby credit facility similar to that provided to the LGFA, and enabling legislation alongside regulatory exemptions to allow councils and water entities to defer charges.
The RAS Steering Group says it has funding in place to begin drafting legislation and with approval could implement it within a year.
Watts said officials from the Department of Internal Affairs, Treasury and the Ministry of Business, Innovation and Employment will assess the merits of the business case.
“Further decisions will be made in due course once that advice has been received,” he said
“We are aware there is growing interest in the RAS within the sector, with councils across the country signalling their support for such a scheme.
“There has been extensive work by local government and the private sector on this proposal and I appreciate these efforts.
“I see promise in the scheme as it could deliver for ratepayers. But it’s best we look into the details and specifics before making any decisions.”