'Steep and unexpected': Government announces council rates cap

<p>The Government has confirmed plans to cap council rates at 4%. </p> <p>Under the proposed system, <a href="https://www.1news.co.nz/2025/12/01/govt-proposes-to-limit-council-rates-rises-to-4-in-new-system/" target="_blank">first mooted late last year</a>, annual rates increases would remain within an initial target range of 2% to 4%.</p> <p>This range will be reviewed every six years and updated "where necessary to reflect costs outside councils' control".</p> <p>The target range would include a minimum rate increase to cover the costs of delivering their services and investing in infrastructure. </p> <p><b></b><a href="https://www.1news.co.nz/2026/08/25/live-stream-local-government-minister-simon-watts-makes-announcement/" target="_blank"><b>Watch Local Government Minister Simon Watts make the announcement here.</b></a></p> <p>Exemptions would be available in exceptional circumstances, such as natural disasters, or when councils can "demonstrate prudent financial management and a justified need to operate above or below the target range".</p> <p>The scheme excludes water services and will continue to be regulated separately. </p> <p>An independent regulator will also be established.