Higher cost to use council-owned facilities possible if rates cap goes ahead

Wednesday, 10 December 2025

Turanga, Christchurch’s central library, is one of many council-owned services that could become more expensive to use if a proposed rates cap goes ahead.

Christchurch could close all the libraries, pools, parks, and art galleries for a year and not accumulate enough savings to cover a strict rates cap by 2034.

About a week after central government proposed a rates cap of between 2% and 4% on local councils, Christchurch city councillors heard it would need to find between $122 million and $205m in cuts or alternative revenue by 2034.

That was more than the collective budget of several council services for one year, council’s principal financial adviser Mitchell Shaw said at a public workshop on Tuesday.

The cost of using public pools in Christchurch could be raised if a rates cap is introduced. (file photo)

The Government’s proposal would see the council needing to find between $28m and $38m of cuts in the 2027/28 financial year. But $28m was about the cost of the entire budget for recreation facilities, Shaw said.

The Government wants to cap rates increases - except where it comes to funding water services - at a figure close to the consumer price index.

As households struggle with inflation and tighten their belts, so too should councils, the Government has argued.

But inflation did not hit construction prices the same way it hit a tub of hummus, Shaw told The Press.

Councillor Tim Scandrett wanted to know if the cost of people using swimming pools would be impacted.

He told councillors how Infometrics found the cost of building a bridge went up 38% over a three-year period to 2024. The latest CPI figures has inflation at 3% for the year ending September.

With rates revenue accounting for up to 52% of the council’s budget, even with the cost of water services excluded, the council would either need to make significant cuts, or find alternative revenue sources.

That could look like new levies, taking on more debt, and increasing costs for people to use council-owned facilities, staff said.

A concerned Cr Tim Scandrett asked staff what impact it could have on the cost for people to use swimming pools, saying drownings were a serious issue and people needed somewhere to learn.

Cr Sam MacDonald, who led the workshop on Tuesday, suggested they could get more information about fixed costs later.

Council staff said the conclusion of multiple scenarios that had been modelled found necessary savings could not be done through capital expenditure alone. It would require cuts to day-to-day expenses.

For perspective, Shaw said $122m was the cost of the entire communities and citizens budget, which included libraries, service centres, recreation and sport.

“If at that year [2034] we closed all the libraries, all the parks, all the art galleries, all the pools, we’d still be $50m away from filling that hole, wouldn’t we?” Cr Nathaniel Herz Jardine asked staff, referring to the cost of meeting a cap closer to 2%.

There were several other consequences staff raised. The council could fail to balance its budget, its credit score could worsen and its ability to borrow could be threatened, limiting the council’s capacity to respond to natural disasters.

On the flip side, Shaw said if the Government chose to not collect GST on the rates collected by the council - “a tax on a tax” Shaw said others described it as - there were savings of $124m in one year alone.

For now, there were many questions lingering on the rates cap proposal. There was no analysis, no draft legislation or insights into what alternatives the Government considered.

The council has until early February to give feedback on the rates cap. Staff said the Government had not opened consultation to the general public, but select organisations were invited to participate and ask five questions.