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Proposed rates capping system
Learn more about the proposed rates capping system for councils.
The system is intended to improve the affordability, predictability and transparency of rates increases over time, while recognising that councils face changing costs and local priorities. The system is designed to support councils' ability to continue delivering local services and investing in infrastructure.
The Bill proposes a target range for rates increases, initially set at two to four percent per year. The level of the target range will be reviewed every few years.
Follow the Bill through Parliament
Members of the public, councils, sector organisations and other interested parties can follow the Bill's progress through Parliament, including Select Committee consideration and opportunities to make submissions.
You can track the Bill on the Parliament website (Parliament website).
What does the proposed system mean for ratepayers?
The proposed rates capping system is intended to provide households and businesses with greater certainty about future rates increases. The objective is to help make rates increases more predictable and manageable over time.
The proposed system would:
- Provide a target range (a minimum and maximum percentage) for annual rates increases.
- Incentivise councils to improve fiscal discipline through more careful spending decisions.
- Create guardrails around rates increases while allowing some flexibility in particular circumstances.
What does the proposed system mean for councils?
Councils will continue to make decisions about:
- Local services and service levels.
- Infrastructure investment.
- Growth and development planning.
- Local priorities and spending decisions.
The proposed rates capping system does not change councils' responsibility for delivering services and planning for their communities. Instead, it introduces a system for limiting the pace of rates increases across the local government sector. The proposed system is also intended to encourage careful financial planning and spending decisions while maintaining investment in essential services and infrastructure.
Technical information and detailed questions and answers
Additional technical information is available for councils, analysts, stakeholders and members of the public who want more detailed information about how the proposed rates capping system would operate.
See our technical information and detailed questions and answers
More information
See our proactive releases about the proposed rates capping system
Read the Minister's release (Beehive website)
Implementation timelines (PDF, 156KB)
Next steps
The proposed legislation will now progress through the Parliamentary process, including Select Committee consideration, where councils, sector organisations and communities will have the opportunity to provide feedback through submissions.
The next steps are:
- August 2026: The Local Government (Rates Capping) Amendment Bill has been introduced to Parliament.
- During the Parliamentary process: Councils and the public can review the proposed legislation and participate in the Select Committee process.
- 2027 to 2029: MCERT will provide guidance, technical information and implementation support as councils prepare for and implement the new framework. The regulator function will be established in early 2027. (the following dates are based on the current content of the Bill and assume that it will be enacted by Parliament in early 2027 – this could change)
- For 2027/28 and 2028/29 rates increases: Councils will be required to have regard to the proposed target range. This period is intended to support transition and planning.
- For rates increases from 1 July 2029: Councils will be required to comply with the target range.