Our approach to rates – an average rates rise of 7.2%

We recognise that Nelson is facing a cost of living crisis. The community is under real pressure with rising costs impacting household budgets and business viability. The same inflationary pressures are driving up costs at Council and, along with rising interest costs, staff salary increases and the costs from the severe weather event, are putting budgets under intense pressure. However, Council does not want to add to the burden faced by our community, and we are proposing to keep the overall rates rise to no more than the mid-year inflation rate.

What we’re proposing
Through a careful programme of reducing budgets, Council has managed to balance increased costs with reductions to propose an overall average rates rise of 7.2%. This is not an austerity budget – Council is seeking value for money for the ratepayers, still investing for the future, and maintaining key services.

To bring the percentage down from an initial projected increase close to 20%, Council has had to carefully manage both its internal budgets, external grants, make a number of trade-offs and spread costs, like those from the August 2022 severe weather event, over multiple years.

We have been unable to fully fund the depreciation impact driven from the 2022 infrastructure revaluation in one year. Operational budgets have generally not increased in line with inflation, including the salaries budget. Funding to community groups and facilities has had to be held at 2022/23 levels. Even with these reductions, Council’s proposed rates rise will breach the rates cap set for itself in the Long Term Plan (which is the Local Government Cost Index plus 2.5% – 6.8% in 2023/24), although no one anticipated at that time the sharp rise in interest costs, inflation nor the significant severe weather event costs.

We’ve also had to trim budgets including regular maintenance budgets. You may notice the impact of this in Council being less proactive in its service response – routine issues may take longer to be repaired, services may be less available or slower than you are used to or expect.

We will still maintain momentum on infrastructure upgrades and key projects for the future of our city and to help build our resilience for future weather events and increase our housing capacity, but Council felt some reduction in service standards and frequency was a price worth paying to keep rates rises down.


A 7.2% increase in the rates revenue required to run the city will increase rates income to approximately $94.8 million in 2023/24. Net debt is projected to increase by $38.6 million from the Annual Plan 2022/23 to a total of $199.6 million by the end of 2023/24. However, this increase in debt is well within our debt cap set within the Long Term Plan of a debt to revenue ratio of 175%.

The actual rates increase for individual properties will vary around the 7.2% average increase. This is because each ratepayer will have a different mix of components making up their rates bill (see examples of proposed rates for 2023/24 in the table on page 30).

For residential ratepayers, the stormwater/flood protection charge is increasing by 23.9%, the wastewater charge by 9.6%, and the water annual charge by 3.1%. The average general residential rate, including the uniform annual general charge (UAGC), is increasing by 3.3%. A ratepayer without some of these three waters services, for instance, will have a lower increase than 7.2%.

We have deliberately reduced the UAGC from 11% to 8.7% of total rates (excluding the water annual charge and water volumetric charge) to spread the rates increase more equitably, resulting in less variation in the actual rates increase for individual properties.

The following graph shows some of the key costs driving the rates rise and the proposed steps Council has taken to reduce the rates required.

The table compares historic national rates increases, Nelson rates increases and the inflation rate. It shows last decade Nelson rates increased 37.7% as compared to inflation of 15.2%. Keeping rates to no more than inflation is a different approach from the last decade.

Tell us what you think

Do you support Council’s steps to minimise the rates rise to an average of 7.2%? Let us know here