DIA Council profiles

Government, via the Department of Internal Affairs (DIA), has introduced ‘council profiles’ to compare key statistics between councils. The project’s stated aim is to boost transparency and accountability of local government.

Hamilton City Council supports initiatives which help the wider public understand the opportunities and challenges councils deal with. However, there is concern in the sector that comparing councils through these profiles may be misleading and confusing.

• Councils are so different, and have such differing services and challenges, that there is no meaningful way to compare financial information in a simple table.
• There are concerns among the sector, especially heading into local government elections, that the tables could be used in isolation to claim a council is performing better than another. Unfortunately, some people do take shortcuts, and may take the opportunity to use the information to make claims that lack context and lead to misinformation. 

Hamilton has been New Zealand’s fastest-growing city for the last two years and is expected to remain the fastest growing city for some time. As a Tier 1 high-growth metro, it must pay for Government’s requirements for growth. 

Meeting Government’s requirements for Tier 1 growth councils means funding additional planning, legal and staff expenses as well as increased capital works and debt.

Hamilton’s debt levels have increased rapidly in recent years. But without this debt, today’s ratepayers would be substantially worse off.

In the three years to August 2024, Hamilton City Council and its partners completed $909 million worth of capital projects across the city. That is almost four times more what we receive each year in rates. Without debt funding these projects would have been impossible to pay for without significant rates increases.

Major infrastructure is a long-term investment. Like homeowners borrow many times their annual income to purchase a home, Councils use debt to plan and complete capital projects and smooth the cost over many years. It protects current ratepayers from huge hikes and means the people receiving the benefit of these facilities in the years to come also pay a contribution towards the cost.

Council profiles are part of a push for greater transparency and reduced costs for householders. When you look at what an average household spends per year on tax and rates, around 93% goes to central government and only 7% to local government.

Infometrics estimates an average Kiwi household pays around $2,900 a year in rates – and $37,000 in tax. (Tax total is based on two median income earners and includes both income tax and GST.)

To keep debt to manageable levels, the Financial Strategy includes a cap on our net debt as a percentage of our revenue. In line with rules set by the Local Government Funding Agency (LGFA), Council’s lender of choice, this has been gradually reducing from 300% in recent years and is now set at 280%. This means we can borrow up to $2.80 for every $1 collected in revenue.

The LGFA has recently begun allowing for bespoke net debt-to-revenue ratios of up to 350% for high growth councils such as Hamilton City Council. Council has chosen to retain the 280% limit, with our net debt-to-revenue ratio projected to be well below that level each year, as shown below. The option to move to a bespoke limit remains available to Council should the need arise.

Water Supply and Wastewater have been excluded from 26/27 onwards

This measure tracks progress towards our goal of paying for the everyday costs of running the city from everyday revenues (rates, fees, and user charges) rather than borrowing to make up the difference. We call this balancing the books. The graph below represents Council’s recent and projected balancing the books results.

This measure is different to – and more stringent than – the government’s ‘balanced budget’ measure that is referred to in the government’s data release. It applies a stricter definition of what counts as ‘everyday revenue’ to ensure that only revenue that is genuinely intended to be used to meet ‘everyday costs’ is taken into account. Unlike with the government’s measure, revenue that is intended to fund capital expenditure is not included in this measure.

As shown below, Council is due to balance the books every year from 2026/27. However, our ongoing stormwater asset revaluation may impact this. This issue is fully explained in the 2025/26 Annual Plan.

Water Supply and Wastewater have been excluded from 26/27 onwards

When we set a Long-Term Plan, we set a limit on rates increases to existing ratepayers over the 10 years covered in the Long-Term Plan. The projected rates increases to existing ratepayers over the course of the 2024-34 Long-Term Plan are set out below.

The total rates revenue we receive, which is what the government data release is focused on, will vary by a different amount, as that figure also takes into account rates revenue from properties that are newly rated each year. These properties increase Council’s overall rates collection. This is particularly relevant for Hamilton, which is the fastest growing city in the country.

For example, the below graph shows a 15.5% rates increase to existing ratepayers in 2025/26. Because of the additional rates from growth, the overall rates revenue increase in 2025/26 will be 16.9%, which is the number referenced in the government data release.