What National's policies could mean for your household in 2026

The key distinction is that National's proposed rates cap would limit increases in ordinary council rates, but it would not cap your total council bill or your water charges.

For a household with a mortgage, two working parents and school-age children, that distinction matters. You could see more predictable rates increases while still facing substantial increases in water, wastewater and stormwater costs.

There are three separate things to understand:

1. What National proposes to change about council rates.
2. What its water reforms mean for water bills.
3. What councils would still be able to decide themselves.

I'll separate the party's promises from what has actually become law, because that matters when assessing what you could realistically expect after the election.

1. Ordinary council rates: National's proposed 2–4% cap

Proposed policy

National's 2026 policy is to introduce a target range limiting annual increases in council rates to 2–4%.

The Rates Capping Bill passed its first reading on 1 September 2026. Its proposed arrangements are:

• Councils would generally have to keep annual rates increases within 2–4%.
• The lower limit is intended to allow councils to maintain essential services and infrastructure.
• The upper limit is intended to constrain excessive increases.
• Exceptional circumstances, including natural disasters, could justify exemptions.
• Councils demonstrating prudent financial management could also seek exemptions.
• An independent regulator would oversee compliance and exemptions.

National proposes that councils consider the cap when preparing long-term plans from July 2027, with the cap fully taking effect from 1 July 2029. Keeping rates affordableRates Capping Bill passes first readingLocal Government (Rates Capping) Amendment Bill

What this could mean for you:

If your ordinary rates component were $4,000 a year, a 2–4% increase would mean:

Increase	Extra per year
2%	$80
3%	$120
4%	$160

These are illustrative figures, not a forecast of your actual council bill.

The important limitation is that the cap would not necessarily restrict every component of your council invoice.

2. Water, wastewater and stormwater: no equivalent 2–4% cap

Important household distinction

National's water policy is called Local Water Done Well.

It has been implemented through the Local Government (Water Services) Act 2025. It replaced the previous Government's Three Waters model.

The central idea is that councils retain ownership of water assets, but must demonstrate that water services are financially sustainable and properly maintained. Local Water Done Well - Our work - Ministry for Cities, Environment, Regions and TransportLOCAL WATER

What would change?

There are four important elements.

A. Water services must pay their own way

Councils must demonstrate that water revenue is sufficient to cover:

• Maintenance and repairs.
• Depreciation and replacement of pipes.
• Infrastructure upgrades.
• Capacity for population growth.

Water funding must be ring-fenced, meaning it cannot simply be diverted to other council activities.

B. Water charges are not covered by the rates cap

This is particularly important.

The Rates Capping Bill explicitly excludes rates relating to:

• Drinking water.
• Wastewater.
• Stormwater.

These costs are regulated separately. Local Government (Rates Capping) Amendment BillLocal Government (Rates Capping) Amendment Bill

That means a council could potentially increase water charges by more than 4%, even if its ordinary rates increase stayed within the proposed cap.

C. Councils retain choices about how households pay

National does not prescribe one national water pricing model.

Councils could choose:

• Fixed annual water charges.
• Metered, usage-based water charges.
• Charges for new connections.
• Water costs included in rates.
• A combination of these approaches.

National's policy proposes economic regulation to ensure water pricing is fair and infrastructure investment is adequate. LOCAL WATERLocal Water Done Well - Our work - Ministry for Cities, Environment, Regions and Transport

D. Water infrastructure could still mean higher household costs

National says access to longer-term borrowing could spread infrastructure costs over the life of assets.

That could reduce immediate pressure on some water bills.

However, National also acknowledges that some councils will need to increase charges to fund necessary investment.

There is no promise that household water bills will fall. LOCAL WATER

3. What remains a council decision?

Even under National's approach, councils would retain significant influence over your household costs.

Decision	Who has influence?
Ordinary rates within the proposed cap	National sets the framework; councils set actual rates
Water charging method	Councils, subject to legislation and regulation
Water prices and charges	Councils/providers, subject to economic regulation
Water infrastructure spending	Councils/providers, subject to investment requirements
Whether to form a regional water organisation	Councils
Local roads, parks and libraries budgets	Councils, subject to central government rules
Local service levels and priorities	Councils, within their statutory responsibilities

For water services, councils could choose to establish a separate council-controlled organisation (CCO), potentially shared with neighbouring councils.

That might enable more borrowing and separate water finances from ordinary council finances.

But National does not require every council to adopt this structure. LOCAL WATERLocal Water Done Well - Our work - Ministry for Cities, Environment, Regions and Transport

4. What this means for a family budget

Consider an illustrative annual household council bill:

Example only – not a forecast

$5,500

Current combined annual council costs

Ordinary rates

$4,000

Water and wastewater

$1,500

Illustrative next-year scenario

Component	Increase	Extra cost
Ordinary rates	3%	$120
Water charges	10%	$150
Total		$270

Combined bill rises from $5,500 to $5,770, despite ordinary rates remaining within the proposed cap.

This illustrates why looking only at the headline rates cap could give a misleading impression of what happens to your household budget.

5. What has actually become law?

There are two different stages to keep in mind as you consider your 2026 vote.

Policy	Position as at 31 October 2026
Local Water Done Well	Established in legislation in 2025
Rates capping	Bill passed first reading; not yet fully enacted
2–4% target	Proposed initial range
Rates cap commencement	Proposed 1 July 2029

The Rates Capping Bill was referred to the Finance and Expenditure Committee. Parliament was dissolved on 1 October ahead of the general election, so the next Parliament will need to consider its progress. Rates Capping Bill passes first readingLocal Government (Rates Capping) Amendment BillLocal Government (Rates Capping) Amendment BillLocal Water Done Well - Our work - Ministry for Cities, Environment, Regions and Transport

6. Five questions worth considering before voting

Given that your household has a mortgage, children and two incomes to support it, I'd suggest looking beyond whether a party promises lower rates.

These are useful questions to put to National and other parties:

1. Will my total council bill actually be more predictable? Does the policy cover water, wastewater and stormwater as well as ordinary rates?

2. Who pays for ageing infrastructure? Will costs fall on existing households, future developments, taxpayers or some combination?

3. What happens if water charges rise substantially? Are there protections for households already struggling with essential living costs?

4. Will councils have enough flexibility? Could a rates cap result in reduced services, deferred maintenance or greater reliance on separate charges?

5. What happens before 2029? The proposed rates cap does not immediately protect your household from increases over the next few years.

For independent information, these are useful starting points:

• National Party – Keeping rates affordable.
• Government – Local Water Done Well.
• Rates Capping Amendment Bill.
• Parliament – Rates Capping Bill and public submissions.

My overall takeaway

National is proposing to give households greater protection against increases in ordinary council rates, but it is not promising to limit the total increase in household council-related costs.

Its water policy places greater emphasis on financial sustainability, infrastructure investment and separate accountability for water services. Those objectives may improve long-term infrastructure management, but they do not guarantee cheaper water.

The most important distinction for your family is that a 2–4% rates cap is not a 2–4% cap on your total council bill.

One particularly useful next step would be to examine your actual council rates invoice and separate ordinary rates from water charges. That would show how much of your household expenditure National's proposed cap could potentially protect, and how much would remain exposed to council water-pricing decisions.