Hawke’s Bay councils plan to hike rates for years to come - but can we afford it?

The region's four mayors (pictured) and councillors have big decisions to make around rates rises. Photo / NZME

With mortgage rates rising and living costs increasing rapidly, do Hawke’s Bay councils have an obligation to keep rates down to help residents?

Hawke’s Bay’s five councils are projecting hefty rises in rates over the coming years despite more residents falling behind on rates payments.

But councils say they are being impacted by inflation as much as everyone else, which makes it challenging to stick to budgets, much less reduce them.

The Taxpayers’ Union gathered figures show the average residential rates bill in Hawke’s Bay in 2022 was sitting over $2000 - Hastings’ average residential bill was $2736, Wairoa’s $2650, Napier’s $2324 and Central Hawke’s Bay’s $2287.

Long-term plans show Napier City Council plans to almost double its current residential rates bills by 2031. Its average increase of 8.5 per cent year on year for nearly a decade compounds into a 90 per cent overall increase by 2031, which will put its average residential rates bill at close to $5000.

Hawke’s Bay’s district councils (Hastings, Wairoa and CHB) are also projecting significant rates rises for at least the next few years, with all district council rates bills set to be $4000 or more by 2031.

Hawke’s Bay Regional Council’s rates (its average residential rates bill in 2022 was $359) are also forecast to rise 91 per cent by 2031.

Hawke’s Bay Regional Council chief executive James Palmer said the economic climate made it a challenging time both for residents and the council, and a council review was under way.

“The council is acutely aware of the pressures on ratepayers and we have seen an increase in rates arrears and ratepayers seeking to go on payment plans.

“We are also experiencing significant cost inflation in our own operations that is placing pressures on budgets.”

He did not say whether the council would be able to reduce projected rates increases.

“We have begun a review of our revenue and financing policy, which will consider matters such as fairness and affordability of all the council’s rates, fees and charges.”

Hawke’s Bay councils revise their long-term plans every three years, which set out spending goals for the next 10 years and include projected rate increases.

All five councils are in the early stages of preparing their 2024-2034 long-term plans and are well under way in drafting annual plans for next year - which will give them an opportunity to revisit budgets and spending.

Any changes to rates bills kick in on July 1 of each year.

Former Napier mayor Barbara Arnott, who is now retired after decades of dedication to local government roles, said councillors would be fully aware of the tough economic climate and pressure to keep rates down.

“I think the realities are that the councillors know very well what their people are going through and will make responsible decisions,” she said, of setting rates.

“Every year in their annual plans the councils will look at their rates and no one will want to impose more [rates] on their people.

“Everyone knows we are looking at going into a recession and it has been pretty hard over the past two years in particular.”

Hastings Mayor Sandra Hazlehurst said her council would need to be “disciplined” in its decision-making and budgeting, but did not go as far as stating an option would be reducing planned rates rises.

Hastings District Council has relatively high rates compared to other councils in the region, but it also has the lowest projected rates rises over the next eight years of the region’s five councils.

“We are very aware that there are a lot of people on fixed incomes being affected by the current economic conditions,” Hazlehurst said.

“We will be mindful of that when setting our priorities next year and that will mean making some tough decisions.”

She said a focus over the next few years would be working “hard to get external funding support for initiatives for the community”.

Wairoa Mayor Craig Little said councils were facing a lot of challenges themselves, and Wairoa council was having to fund some of the repairs caused by storms this year - to the tune of millions of dollars.

“People’s ability to pay rates is certainly a factor that is taken into consideration [in setting long-term and annual plans], and that needs to be balanced with the fact that council is also facing the same challenging economic outlook and increased costs as people in our community.”

Central Hawke’s Bay Mayor Alex Walker said growing costs on the council meant increasing rates above projections - rather than reducing them - was likely.

“We already know that increases to interest rates, insurance and contract costs are going to have a significant impact on top of the projected 6.5 per cent increase [planned for 2023/24].”

She said it was “an extraordinarily challenging time for the whole country”.

Napier Mayor Kirsten Wise said “Government reform” was adding extra financial pressure on councils and pushing rates up.

She did not say whether the council would bring down projected rates rises - of between 7 and 9 per cent each year until 2031 - but said the council was “acutely aware of the cost of living pressures on the community and the impact on rates affordability”.