Rate-Capping Confirms National’s Impoverished Imagination.

Nice To Have Been Given: Dunedin wasn’t built out of rates; it was built out of investors’ confidence in its future. The city’s magnificent botanic gardens and the majestic trees scattered through them were not planted by people afraid of spending money on “nice to haves”.

RATE-CAPPING is one of those right-wing policies that sound common-sensical at first but then turn out very badly indeed. It’s right up there with the done-to-death metaphor representing the economy as being no different from an ordinary household. Predictably, Prime Minister Christopher Luxon made repeated use of the household metaphor when announcing his government’s latest assault on local government, comparing city councillors’ financial management unfavourably with the frugal householder’s budgeting skills.

In reality, rate-capping is a rather tawdry mechanism for shifting the blame for rising local taxation away from where it rightly belongs – with central government. Having set up local councils as patsies, Wellington politicians are free to pull the trigger on their citizens’ hopes with impunity, knowing that the blame will fall on the local power structures which they have, for decades, loaded up with expensive responsibilities, even as they simultaneously starved them of funds.

Ask yourself this question: Could the city of Dunedin have been constructed exclusively from the rating base of its original settlers? Obviously, the city that was for a brief historical moment New Zealand’s most prosperous metropolis needed a great deal more capital than could be extracted from a few thousand dour Presbyterians. Dunedin was built on loans secured by a colonial government flush with gold, and a rapidly growing nation that was clearly destined for great things.

With the confidence of British investors thus established, Dunedin was able to attract the entrepreneurial talent needed to make it grow even bigger, setting in motion a virtuous upward spiral that continued well into the twentieth century.

Dunedin wasn’t built out of rates; it was built out of investors’ confidence in its future. The city’s magnificent botanic gardens and the majestic trees scattered through them were not planted by people afraid of spending money on “nice to haves”. Had New Zealand been governed by politicians whose imaginations were that impoverished, the world would never have acknowledged it as “God’s own country”.

New Zealand’s curse in the twenty-first century is a ruling-class for whom confidence and imagination are dirty words. Inevitably, this lack of confidence and imagination has fostered a political class whose all-purpose pessimism about New Zealand’s future is matched only by its general horror of creative risk-taking.

This present government is a veritable paragon of pessimism: a risk averse, strictly cash-up-front, operation that regards politics as first, last, and always a transaction. Donors give; donors get. The rest of us must shift for ourselves.

Rather than setting up central government as a sort of invigilator; constantly poised to mark local government’s examination papers; the Prime Minister and his colleagues could have accepted that in a nation of just five million citizens the continuous development of New Zealand’s natural and human resources can only ever be successfully accomplished by uniting the efforts of both national and local politicians.

For years now the obvious solution to future-proofing the nation has been to increase the rate of GST and divert the additional revenue to a fund from which local councils can finance the maintenance and improvement of their infrastructure and amenities.

Equally obvious is the ability of central government to borrow capital more cheaply than local government. Major infrastructural development, such as upgrading New Zealand’s water supply and treatment systems, should have been made the responsibility of a publicly owned corporation – albeit one guided by local stakeholders.

Unfortunately, fixing local government isn’t rocket science. If it was, then the work of assembling the needed talent and overcoming the many and varied obstacles to solving the problems of the present while moving confidently into the future would be the responsibility of designers and engineers whose perennial questions are “What?” and “How?”; rather than unimaginative and risk-averse politicians whose reflexive responses are “No”, and “Can’t be done”.

Christopher Luxon’s and Simon Watts’ rate-capping legislation places the poverty of the National Party’s imagination, along with its crippling lack of confidence in the creativity and courage of New Zealanders, beyond question. The Coalition Government’s ideological hostility to any suggestion that the nation’s problems can and should be overcome collectively cannot help but impose a swingeing cost-recovery model on local government.

Our rates won’t disappear, indeed they’ll rise every year by 2-4 percent. But, for the “nice-to-haves”, all those amenities that make a city liveable, and give it soul, we’ll pay through the nose.

This essay was originally published in The Otago Daily Times and The Greymouth Star on Friday, 5 December 2025.