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We own a home with a mortgage, have school-age children and rely on two wages. After mortgage payments, rates, power and groceries, there is little buffer. I am considering my vote in the 2026 New Zealand general election. What would national party policies change about local rates and water costs, and what remains a council decision?
What National's policies could mean for your household budget
The key distinction is that National is proposing to put a limit on increases in ordinary council rates, but not on water charges. That means its policies could make one part of your council bill more predictable without necessarily making your total housing costs significantly cheaper.
For a household with a mortgage, school-age children and two incomes, that distinction is important. A lower increase in rates does not automatically mean lower water bills, and neither policy guarantees that your overall cost of living will fall.
As at 1 November 2026, here is what National's published policies and the current legislative framework mean.
1. Ordinary council rates: a proposed 2–4% annual range
National policy announced
National's flagship policy is its proposed rates-capping system.
The Local Government (Rates Capping) Amendment Bill passed its first reading in Parliament on 1 September 2026. It proposes an initial annual rates increase target range of 2–4%.
The intended timetable is:
| Period | What happens |
|---|---|
| 2026/27 | Existing council rates decisions |
| 2027/28 | Councils must have regard to the 2–4% range |
| 2028/29 | Councils must have regard to the range |
| From 1 July 2029 | Councils must comply, unless exempted |
National says the intention is to end repeated double-digit rates increases and give households more certainty. Keeping rates affordableRates Capping Bill passes first readingLocal Government (Rates Capping) Amendment Bill
What this could mean for you:
- It could reduce the risk of large increases in ordinary rates.
- It could make future household budgeting more predictable.
- It does not mean your rates will only increase by 2%.
- It does not guarantee that your individual rates bill will increase by no more than 4%.
There is an important technical distinction: the cap applies to a council's average rates revenue per rating unit, not the individual bill for every property.
Your individual bill can still increase by more than 4%, depending on property valuations, targeted rates and how the council allocates rates.
2. Water costs: not covered by the rates cap
Important household-budget qualification
This is probably the most important part of the policy to understand.
National's rates-capping legislation explicitly excludes:
- Drinking water supply.
- Wastewater and sewerage.
- Stormwater services.
These are treated separately from ordinary council rates. Proposed rates cap: Technical questions and answers for Local Authorities - Our work - Ministry for Cities, Environment, Regions and TransportLocal Government (Rates Capping) Amendment Bill
National's wider water policy is based on the Local Water Done Well framework. This reforms how water infrastructure is organised, funded and regulated.
The framework includes:
- Councils preparing water services delivery plans.
- Councils being able to establish separate water organisations or other permitted delivery arrangements.
- Greater access to borrowing and financing for necessary infrastructure.
- Independent economic regulation by the Commerce Commission.
- Greater transparency around water providers' prices, spending and infrastructure investment.
The Commerce Commission's new information-disclosure rules took effect on 27 February 2026. They require water providers to report information about prices, expenditure and infrastructure. Water services delivery system - Our work - Ministry for Cities, Environment, Regions and TransportEconomic regulatory rules for local water service providers
What this could mean for your household:
The reforms aim to improve efficiency, accountability and long-term infrastructure investment. However, they do not promise cheaper water.
In fact, there are reasons water charges could continue increasing:
- Old pipes and wastewater systems need replacement.
- Population growth creates additional infrastructure costs.
- Environmental and drinking-water standards require investment.
- Water providers need to recover the cost of maintaining and improving their networks.
The important point is that the proposed 2–4% rates cap will not protect you against increases in these water charges.
A council could therefore keep ordinary rates increases within the target range while water costs rise considerably faster.
3. What remains a council decision?
National's reforms would constrain some council financial decisions, but councils would retain considerable control over local services and spending.
| Decision | Who controls it? |
|---|---|
| Ordinary rates within the national framework | Council, subject to the cap |
| Individual property rates allocation | Council |
| Property differentials and rating categories | Council, within legislation |
| Local water service arrangements | Council, within national legislation |
| Water charges and pricing | Relevant water service provider, subject to regulation |
| Road maintenance priorities | Council |
| Libraries, parks and recreation spending | Council |
| Local infrastructure priorities | Council |
| Local service levels | Council, within its legal obligations |
| Water quality and economic regulation | National regulators |
Proposed rates cap: Technical questions and answers for Local Authorities - Our work - Ministry for Cities, Environment, Regions and TransportWater services delivery system - Our work - Ministry for Cities, Environment, Regions and TransportLocal government system improvements - Our work - Ministry for Cities, Environment, Regions and TransportLocal Government (Rating) Act 2002
There is also a potential trade-off.
If a council cannot raise ordinary rates sufficiently to pay for everything it wants to do, it may have to:
- Reduce or defer some projects.
- Cut or change discretionary services.
- Prioritise roads, pipes and essential infrastructure over other spending.
- Seek an exemption from the rates cap where the circumstances justify it.
The proposed system allows exemptions, including for exceptional circumstances and certain financial-planning or major infrastructure needs.
In other words, the Government sets financial boundaries, but councils still make many of the choices about what happens in your community.
4. What could happen to an actual household bill?
Here is an illustrative example, not a forecast of your council's charges.
Suppose your current annual household costs are:
| Expense | Current annual cost |
|---|---|
| Ordinary council rates | $4,000 |
| Water and wastewater | $2,000 |
| Total | $6,000 |
If ordinary rates increased by 3%, but water charges increased by 10%:
| Expense | New annual cost |
|---|---|
| Ordinary council rates | $4,120 |
| Water and wastewater | $2,200 |
| Total | $6,320 |
Illustrative annual increase
+$320
Equivalent to approximately $26.67 per month
- Ordinary rates: +$120
- Water: +$200
This demonstrates why a rates cap alone might not deliver the household savings people expect.
5. What should you look at before voting in 2026?
I would pay particular attention to five questions when comparing National with other parties.
Rates: Do they support a rates cap? What percentage, when would it start, and what exemptions would apply?
Water charges: Do they have a specific policy to limit household water-cost increases, or are they relying on improved efficiency and competition?
Infrastructure: Who pays for replacing ageing pipes, wastewater treatment plants and stormwater infrastructure? Existing ratepayers, developers, water customers or central government?
Council services: If councils have less ability to raise rates, which services or infrastructure projects would be reduced or delayed?
Household affordability: Are their policies designed to reduce actual household bills, or primarily to slow the rate at which those bills increase?
Useful primary sources to examine:
- National – Keeping rates affordable.
- Government – Water services delivery system.
- Commerce Commission – Water economic regulation.
- Government – Detailed technical explanation of rates capping.
- National – 2026 election policies.
My overall assessment
For a family paying a mortgage and relying on two wages, I would distinguish between three outcomes:
| Outcome | What National's policy offers |
|---|---|
| More predictable ordinary rates | Yes, this is the explicit intention |
| Guaranteed lower total council bills | No |
| Protection against rising water charges | No, water is excluded from the rates cap |
National's rates policy could be helpful if your council has been imposing large ordinary rates increases. However, the water reforms do not guarantee lower water costs, and the effects will depend heavily on local infrastructure needs and the way water services are funded.
My main takeaway: Don't judge the policy solely by the headline 2–4% figure. For your household, the more useful measure is the combined annual cost of ordinary rates, drinking water, wastewater and stormwater.
Those are the costs that ultimately compete with your mortgage, groceries, power and children's expenses.
One useful next step would be to examine your own council's latest long-term plan and water charges, so you can see how exposed your household is to the parts of the bill that National's rates cap does not cover.
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