Households across the Wellington region face rising council rates from July, even as a new water entity prepares to start charging residents separately for water services.
From 1 July, Tiaki Wai will take over the management of water infrastructure from Wellington Water, along with more than $1 billion in associated debt. The new company will send separate water bills to homes, with the average household expected to pay about $310 extra in the next financial year, or around $6 per week. Despite this change, which removes water charges from council rates bills, most local councils are still planning significant rates increases for the remaining services they provide.
The shifting financial burden has placed councils under pressure to find savings, while residents grapple with escalating living costs. The changes have also reignited a long-standing debate about council funding, with growing calls for the central government to start paying rates on its extensive, and currently exempt, properties.
Wellington City proposes 7.4 per cent rise
Wellington City Council has proposed a 7.4 per cent average rates increase for the 2026/27 financial year. The figure, which will be put to public consultation in April, is a significant reduction from an initially forecast 12.7 per cent rise.
After an extensive budget review, a council working group found a series of savings to lower the proposed increase. Te Taurapa Planning and Finance Committee Chair, Councillor Diane Calvert, said it was the lowest proposed rates increase in six years and reflected a major effort to find savings.
Increased inflation, insurance and depreciation costs continue to put pressure on budgets, and we face a range of infrastructure issues that require significant investment. But with households under pressure, we can’t simply pass those costs on. We need to be rigorous in our savings efforts and ready to make tough decisions when it comes to spending.
Wellington Mayor Andrew Little said the council had received a clear message from the public during last year's election. "Rates affordability is a major issue for our communities," Mr Little said. "We are determined to respond to that message and operate responsibly within our means."
The proposed 7.4 per cent increase relates only to council services and excludes the new water charges from Tiaki Wai, which will be billed separately.
Hutt, Porirua and Kāpiti coast increases
In Hutt City, councillors have approved a draft annual plan that proposes an average 9.5 per cent increase to non-water rates. This equates to an extra $4.33 per week, or $225 per year, for the average household.
Hutt City Mayor Ken Laban said the plan focused on minimising costs while safeguarding essential council services. "We know households are under real pressure," he said. "With renewed cost of living pressures and global uncertainty, it’s more important than ever we keep rates as affordable as possible."
Upper Hutt City Council is considering an estimated 9.9 per cent rates increase. According to its draft plan, 60 per cent of rates will go towards maintaining council facilities like sports grounds and parks, while 23 per cent is allocated for roading projects.
In a joint statement, Upper Hutt mayor Peri Zee and chief executive Geoff Swainson said they inherited their financial position "from previous councils" and could not propose significant new spending. They acknowledged the impact of any increase but noted they "expect to remain among the lowest average residential rates in the region."
Porirua City Council is looking at a 3.9 per cent rates rise, slightly higher than earlier forecasts due to an extra $700,000 needed for a road-maintenance contract. Meanwhile, the Kāpiti Coast District Council, which is largely unaffected by the region’s water reforms, provisionally set a 6.4 per cent average rates increase after making $2.3 million in budget cuts.
Calls for government to pay its share
The pressure on household finances has intensified the debate over sources of council revenue. Mayor Andrew Little is leading a push to lobby the government to repeal the section of the Local Government Act that exempts Crown-owned land from paying rates.
Properties like schools, hospitals, and even the parliament buildings do not pay council rates, a long-standing point of frustration for local authorities. Wellington City Council estimates it is missing out on between $5 million and $16.8 million in annual revenue due to the exemption.
Act leader David Seymour has long supported the change, stating it is "a matter of basic fairness to local ratepayers". "Where Crown agencies own significant land and buildings, they should contribute to local infrastructure and services just like everyone else," Mr Seymour said. He argued that ratepayers are effectively subsidising the Crown's presence in their communities.
The Labour Party is also now considering a change to the rules. Local government spokesman Tangi Utikere said the issue has been raised with him multiple times. "Given that it has been raised with me alongside of a number of other revenue options and the like, naturally we will be considering that," he told the Herald. This signals a potential cross-party appetite for reform as councils across New Zealand face funding shortfalls.
The change would mean a significant new revenue stream for councils, potentially easing the rates burden on individual households which have seen costs spiral in recent years. For some long-term residents, like Karori homeowner Judy Rohloff, rates have increased tenfold since the mid-1990s, raising questions about her ability to remain in her home.
As councils finalise their annual plans in the coming weeks, residents will be watching closely. Formal consultation on Wellington City Council's plan will run from 10 April to 10 May, giving the public a chance to weigh in on the proposed rise before it is locked in.
