Neither Whakatāne’s mayor nor a ratepayers’ group intent on lowering rates are happy with the rates capping announced by central Government on Monday.

The Government has proposed a 2-to-4 percent annual rates target band, to be phased in between 2027 and 2029, with a new regulator overseeing compliance. Councils would be able to apply for variations in circumstances such as natural disasters.

Whakatāne Action Group chairman John Howard said although the rates cap would be great news, it had not happened soon enough.

“We’ve had about a 42 percent rate increase in this long-term plan and the council’s agenda on Thursday is indicating that they may increase this year’s rate increase of 9.4 percent back to 10.4 percent.”

He said the time frame would encourage councils to increase rates in the short term.

“We can expect this council to embark on a massive rate hike spending spree for the next LTP. So, for many ratepayers seeking some relief, the timeline is just too far away. It will cause much more hardship.

“The rate capping needed to be effective from 2026. That’s what ratepayers have been asking for.”

He said the council was spending about $9 million a year servicing debt.

“This new council needs to seriously get expenditure that increases debt under control fast for the benefit of the whole district.”

Previous Whakatāne mayor Victor Luca, who had spent his time on council trying to exert downward pressure on rates, said the Government had “achieved in one fell swoop what I couldn’t achieve in six years”.

However, he also noted the 2029 timeline.

“For a struggling ratepayer, that is not soon enough.”

Mayor Nandor Tanczos said rates capping was “well-intentioned but poorly thought out” and likely to make things worse for ratepayers.

“We all want rates to go down, but what is being proposed is largely the same system that has failed across the Tasman, with pretty dire consequences for local communities in New South Wales and Victoria,” he said.

“It just leads to underinvestment in critical infrastructure, reduced public services, and then every few years a major correction that leads to a rates spike. All the evidence is that it does not work for communities and adds massive costs to councils.”

He said it would lead to the sort of underinvestment in infrastructure the country was trying to recover from.

“It’s catch-up time right now. Kicking the can further down the road will lead to an even harder adjustment when reality catches up with us.”  

Mr Tanczos said the regulator function being proposed to oversee the rates capping just added another bureaucratic layer to what was already a heavily regulated area.

“This kind of increased compliance creates more churn on staff time, so what’s meant to be saving us dollars can end up costing us more.”

Accountability should be to the community that elects the councillors and mayor, not to a minister in Wellington.

“Double-digit rates increases are unsustainable, that’s a given.

“Everyone wants lower rates rises, including all of our councillors, but a centrally imposed limit restricts councils’ ability to respond to local needs. It takes away communities’ right to determine their own priorities.”

While Three Waters was not included in the rates cap, the proposal now captured core infrastructure such as roads, bridges and public transport, which the Government had previously indicated would be excluded, Mr Tanczos said.

“Local government needs a common-sense, fast-track process for exemptions – particularly for fast-growing areas or in response to natural disasters.

“That process must be flexible and fast-moving, not bogged down in bureaucracy.”