Double-digit rate rises are now being pegged across the country as the pressure on councils to find money to fix ailing infrastructure has reached a "tipping point", the sector body representing local government has warned.
Local Government New Zealand (LGNZ) president Sam Broughton said that the way councils were funded needed to be reformed.
The organisation, which advocates for councils, has long called for changes to the funding model with central government.
"There is going to be hundreds of billions of dollars required that just needs to be paid for," Broughton told 1News.
LGNZ's calls were joined by Āpōpō — formerly the Institute of Public Works Engineering.
The group's president Gary Porteous said there had been underinvestment for decades and the situation was reaching a critical point.
"The scale of it is massive," he said.
The warning comes as councils are set to consult on their long-term plans next year, which help set out potential rises in rates. LGNZ has warned that many councils are considering double-digit increases as a result of pressure on balance sheets.
In some cities, such as Hamilton, councils have already suggested increases as high as 25.5%. That's despite the cost of living crisis already stretching many families to the limit.
Broughton said: "Councils' share of overall tax revenue has remained at 2% of GDP for the last 50 years, despite our ever-increasing responsibilities.
"The rates proposed in councils' long-term plans are necessary to fund existing services and essential infrastructure, and while councils are always acutely aware of the need to balance the level of investment needed with affordable increases, the pressure on councils has reached the tipping point."
Possible solutions proposed over the years have included changing the councils' funding model through additional revenue sharing with central government, or new lines of income, such as bed taxes for tourists.
Consultation on long-term plans and potential rate rises begin in the New Year.
Broughton said relying only on business and household rates was no longer sustainable and that, in the short term, ratepayers could expect higher bills. He said it was the responsibility of councils to talk about the need for investment in essential infrastructure.
"To not talk about real numbers, even though they might feel alarming to people, would not be a good way of governing cities or regions," he said.
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