Investigations

The Problem with Councils...

1. Context and Concern

Councils across New Zealand — and particularly Tauranga — are imposing large, compounding rates increases over successive years. In one confirmed case, a homeowner is now paying $11,000 annually, with projections showing rates will increase to $25,000 per year by 2030. This is not sustainable for ordinary ratepayers and disproportionately affects:

Retirees and fixed-income earners;
Residents with generational homes and limited liquidity;
Communities facing rising costs of living and economic uncertainty.

This trend represents a deeper issue within the social contract — the foundational understanding that individuals surrender certain freedoms (e.g. through taxation or regulation) in exchange for security, fairness, and essential services from the state. When the balance tips — when the burden becomes disproportionate, unresponsive, and indifferent to human rights protections — the legitimacy of governance erodes. People are not just paying more; they are losing control of their homes and financial independence.

As former Auckland Mayor Phil Goff warned during a council meeting, "Democracy is about governing with the consent of the people, and I’m a little worried we will piss people off enough that they will simply revolt against this." His words highlight the danger of bypassing public engagement in decisions that directly affect people's lives.

This erosion of consent is especially stark when viewed against the backdrop of council leadership spending. In Tauranga, for example, the Council CEO is reportedly paid over $600,000 per year, even as ratepayers face escalating charges that many can no longer afford. The contrast is jarring: ratepayers are asked to tighten their belts while senior officials draw salaries that far exceed national averages. It raises a legitimate question — who is the system really serving? When public servants become financially insulated from the consequences of their decisions, the integrity of the social contract begins to collapse.

Real Cost Comparison

In 1998, the same homeowner paid $1,500 per year in rates.
By 2024, this rose to $11,000, reflecting an average annual increase of ~7.96%.
The projected rise to $25,000 by 2030 equates to an even steeper annual increase of ~14.66%.
By contrast, if rates had followed the average New Zealand inflation rate (~2.2%), the 2024 rate would be just $2,641.

This shows the burden on homeowners has far exceeded the cost of living, amounting to an economically coercive trend.

Inflation as a Benchmark for Reasonableness

It is widely accepted by economic experts that inflation serves as the most appropriate benchmark for evaluating cost increases over time. As Nobel laureate economist Milton Friedman explained, “Inflation is the one form of taxation that can be imposed without legislation.” When rates increase far beyond inflation, they represent an extraordinary and disproportionate extraction of private wealth.

2. Council Intent and Structural Expropriation

Local councils, like all public entities, operate within a marketplace where goods and services used to maintain infrastructure, manage waste, operate facilities, and pay staff are sourced from competitive private sector providers. These suppliers — from construction companies to IT vendors — typically raise their prices in accordance with inflation, as exceeding that threshold would render them uncompetitive and drive business loss.

Yet, councils are not bound by this market discipline. Their unique power to impose rates without market constraint allows them to exceed inflation-linked increases year after year. This pattern has become an intentional mechanism to extract additional revenue far beyond what is necessary for supply or maintenance.

This behaviour exposes the fundamental difference between market-based supply and coercive fiscal extraction. It reflects not a failure of budgeting, but a structural incentive to shift local government ambitions — often including vanity projects and bloated administration — onto the backs of private households.

In effect, this has enabled what can fairly be termed structural expropriation — a long-term, coercive transfer of personal wealth from homeowners to the state without meaningful checks, driven by unregulated rating power and shielded from competitive scrutiny.

Accumulated Structural Expropriation – 1998 to 2025

In 1998, a Tauranga homeowner paid $1,500 in annual rates. Had this amount increased in line with inflation (~2.2%), they would be paying only $2,641 in 2025. Instead, they now pay $11,000. The annual difference of $8,359 compounded over 27 years amounts to a cumulative overpayment of $110,760 — money extracted beyond inflation-adjusted fairness.

Projected Structural Expropriation – 2025 to 2030

Looking ahead, with projected rates rising to $25,000 by 2030, the difference from the inflation-adjusted path will become even more severe. The expected cumulative overpayment between 2025 and 2030 will be an additional $98,000, bringing the total structural expropriation from 1998 to 2030 to approximately $208,760 for a single household.

Wider Impact Based on Average Assumption

Tauranga City Council reported approximately 60,120 ratepayers in 2022. While the average rates for 2025 may fall within inflation-aligned expectations, the example of households paying substantially more — such as $11,000 — demonstrates that significant overcharging is occurring within certain residential brackets.

If this example reflects a widespread pattern among mid-to-upper tier ratepayers, the scale of structural expropriation becomes profound. It is not limited to outliers but may signal a systemic issue affecting a large proportion of the city's homeowners.

3. Lived Testimonies

“It is just so worrisome. I worry all the time. We have rampant council spending in extravagances, not needs, and a bloated entrenched bureaucracy. People are selling up en masse at the Mount because they cannot afford the rates — but no one is buying because they can’t afford the rates either.”

“It’s like paying rent to the council to live in your own home. Rates were meant to be for maintenance, not wish list spending. Why should I reverse mortgage my child's inheritance because council won’t rein in their spending? If I want to do something to my property, I have to save — but council just takes what it wants to fund their dreams.”

“For example, $33 million dollars to fit out the interior decoration of the new council building — which includes a $460,000 coffee machine.”

4. The Legal Responsibility to Consult

What the Law Requires

Section 82 of the Local Government Act 2002 requires councils to undertake genuine public consultation. This is supported by clear case law:

Leading Case: Wellington International Airport Ltd v Air New Zealand [1993] 1 NZLR 671 (CA)

The Court held that:

Consultation must be more than a formality;
It must occur before decisions are made;
The views received must be genuinely considered;
Consultation must be real and substantial, not tokenistic.

Provide adequate time and information;
Invite submissions before finalising decisions;
Refrain from pre-determination.

Where these obligations are not met, both legal and democratic legitimacy are undermined.

5. Rights Framework

The New Zealand Bill of Rights Act 1990 protects:

Section 21: Right to be free from unreasonable search or seizure (extended conceptually to economic security);
Section 19: Right to freedom from discrimination (including economic discrimination);
Section 9: Freedom from disproportionately severe treatment or punishment.

The ICCPR, which New Zealand is bound to uphold, reinforces:

Article 17: Protection from arbitrary or unlawful interference with privacy, family, and home;
Article 11: Right to an adequate standard of living.

6. Root Cause and Central Government Responsibility

The root problem is the lack of central oversight and regulation of local government fiscal policy and accountability mechanisms. Key issues include:

Unregulated Spending Authority: Local councils have broad discretion to raise rates without central limits or inflation-linked caps, allowing spending to expand without accountability.
No Protections for Vulnerable Homeowners: Fixed-income residents are unprotected by law from disproportionate rate burdens. There is no statutory requirement for councils to assess affordability impacts.
Weak Consultation Framework: Legal obligations to consult under the LGA 2002 are not backed by enforcement. Consultations often occur after decisions or without real consideration of feedback.
Absence of Fiscal Responsibility Requirements: Local governments are not held to fiscal prudence standards equivalent to the Public Finance Act.
No Integration of Human Rights: Councils are not required to apply NZBORA or ICCPR standards in financial decision-making, creating a rights-blind budgeting system.

What the Government Can Do:

Legislate inflation-linked caps on rates;
Require equity and hardship assessments before rates are set;
Strengthen enforcement of consultation obligations;
Create a Local Government Fiscal Responsibility Office;
Mandate human rights impact assessments in local government financial decisions.

7. Conclusion and Action Points

When homeowners on fixed incomes are expected to reverse mortgage their homes to fund extravagant local government spending — with no meaningful input into those decisions — the social contract is broken.

We urge Members of Parliament to:

Review the adequacy and enforcement of consultation procedures under the LGA 2002;
Inquire into disproportionate rates increases and their impact on vulnerable populations;
Consider legislative or ministerial intervention where councils breach constitutional, economic, and human rights protections.

This briefing is offered as a non-partisan call for legal alignment, fiscal discipline, and respect for the people of New Zealand.

Dear Mr Luxon,

I write to raise serious concerns regarding unsustainable local government rates increases in Tauranga — a trend that I believe also affects many ratepayers across New Zealand.

My complaint is grounded in the damage caused by compounding rates increases that consistently exceed the CPI index — the standard measure of inflation. I offer my own situation as a representative example:

I live in a modest home in Mount Maunganui. In 1998, my annual rates were $1,500. By 2024, they had risen to $11,000 — an average annual increase of approximately 7.96%. Had these increases instead tracked the national CPI (averaging around 2.2% per annum), my 2024 rates would have been $2,641.

Looking ahead, the council projects that by 2030, my rates will rise to $25,000 per year — a projected annual increase of around 14.66%. This is not sustainable.

To illustrate the long-term effect:

From 1998 to 2024, the average annual overpayment (compared to CPI-aligned rates) is $8,359. Compounded over 27 years, that equates to $110,760 in excess payments.
From 2025 to 2030, projected overpayments add another $98,000.
In total, by 2030, this represents approximately $208,760 in structural overpayment — extracted from one modest household.

This is not simply an affordability issue. It reflects a deeper problem — a form of structural expropriation, where rising rates erode personal wealth and housing security with no viable alternative. Effectively, ratepayers are being forced to pay what resembles rent to the council to remain in homes they already own.

I understand some councils are advising homeowners to consider reverse mortgages to meet these obligations. In practical terms, this converts long-term savings and intergenerational equity into short-term council revenue — a move that raises profound ethical and legal concerns.

This situation, I believe, breaches foundational principles protected under:

The New Zealand Bill of Rights Act 1990 (NZBORA)
The International Covenant on Civil and Political Rights (ICCPR)

Both instruments recognise the right to:

Security of property
Freedom from arbitrary interference
A standard of living adequate for health and wellbeing

The law does not permit public bodies to impose policies that amount to economic coercion or de facto displacement. The situation I describe is not isolated — it reflects a systemic issue requiring immediate national attention.