Council models impact of Government’s proposed rates cap
Christchurch City Council Newsline: 8th December 2025
Christchurch City Council has modelled the potential impact of the Government’s newly announced plan to cap rates increases.
On Monday 1 December 2025, Local Government Minister Simon Watts announced the long-promised “rates cap” policy. The proposal is to limit councils’ annual rate increases to a range between inflation and GDP growth, with water services charges and targeted rates excluded from the cap. Under the policy, the minimum increase would be set at 2% and the maximum at 4%.
While key aspects of the policy remain uncertain, including who would regulate council rates rises, the Minister confirmed the Government intends to legislate to enforce the cap.
The Council has undertaken initial modelling to understand the potential implications of the proposed cap. The Mayor and Councillors were updated on this during a workshop today.
These results are assumed positions only and will require updating as further details of Central Government’s legislation and policy updates become available.
“We will continue to refine our modelling as more information becomes available from Central Government,” Mayor Phil Mauger said.
Key findings from our modelling include:
- The lower the rates cap, the less the Council is able to fund itself through rates, compared to current projections.
- With a 4.0% rates cap commencing in 2027/28, council rates in 2029/30 would need to be reduced by 12.6% an amount of $80.3 million from the current forecast.
- With a 2.0% rates cap commencing in 2027/28, council rates in 2029/30 would need to be reduced by 17.5% an amount of $112 million compared to current forecasts.
- The cumulative impact of a rates cap significantly reduces the amount of rates revenue that can be collected over time compared to current projections.
- 4.0% rates cap commencing in 2027/28 would require savings of $28.0 million (from current projections) in 2027/28. By 2033/34, the required savings increase to $122.4 million.
“Cost reductions or other funding sources will be required to achieve the rates cap. Temporary or one off-savings will not address a rates cap. Savings achieved need to be permanent,” the Mayor said.
“Any rates cap will have significant implications for funding of key services and infrastructure across the city.”
For example, the 2027/28 projected Council annual net operational budget for Libraries is approximately $34.8 million, for Recreation Facilities is $28.4 million, and Events and economic development initiatives is $18.4 million. Paying back our borrowing for our capital programme is $102.8 million in rates per annum.