How Wellington Council's spending is derailing the city

NZ Herald

2 days ago

The cost of living and doing business in Wellington
Calls for rates restraint are dismissed by some as miserly grumblings of privileged homeowners. They're wrong. We are not strangers to the city or its needs; we're Wellingtonians who've invested decades of our lives helping to shape this place. We've walked the streets and talked to the people and business and the message is clear – it's become progressively too expensive to live and do business here. It's particularly unfair on businesses – large and small – who pay 3.7 times the level of rates compared to homeowners, the largest differential in the country.
Some simple numbers illustrate the strain: if the council had limited its rates increases to match inflation since 2020, every household would be $1200 better off this year. That money matters, especially for first-home buyers, low- and fixed-income families and those with mortgages. It's money that could have circulated in the local economy, helping sustain shops, cafes and jobs. In the five years to 2025, inflation was 22%, but rates surged 83%. Worse, the council's 2024 Long-Term Plan shows rates more than doubling between 2024 and 2034 (including water infrastructure expenditure). Water services are now being transferred to a new entity, with households reportedly facing similarly significant and challenging increases in their water costs.
For many, rates are the second biggest expense after their mortgage. For businesses, rates trail only rent and staff costs. The results are predictable: growth sputters, new housing and jobs don't materialise, and the boast that Wellington can 'grow its way to prosperity' rings hollow.
Paul Ridley-Smith
Debt: Mortgaging the future for the present
From 2019 to 2024, total council spending (operating plus capital) grew 63%. Staff costs alone grew 48% (nearly three times wage inflation), with the number earning over $200,000 almost doubling. Such escalation is unheard of in the private sector and yet the promised infrastructure gains have been modest at best.
Debt has also soared. Council gross debt was $0.6 billion in 2019 and it's now over $2 billion, and growing. In 2019, $1 in every $12 of rates serviced the council's debt interest, today it's $1 in $6. We are mortgaging our city's future; coming generations will pay the bill.
Where has all this money gone? It hasn't flowed into suburbs like Newlands, Strathmore, Newtown, or Karori. Instead, nearly $1 billion has been lavished in and around Civic Square: the Town Hall, the rebuilt library, purchase of a parking building, the Takina convention centre, a $40 million fit-out of council offices (in a prime location), demolition of buildings, and modest city centre upgrades. Going forward there's around $600 million on social housing upgrades and completion of a $400 million project building the planet's most sophisticated sludge plant to reduce human waste to dry pellets. Nice.
This might have been bearable if the money was spent on the 'bones' of the city —water pipes, streets, parks - the infrastructure that truly underpins public and economic wellbeing. But too little has. The pipes are still leaking profusely – 44.3 million litres per day. That's more than 17 Olympic-size swimming pools of precious, treated water being wasted every day.
How did we get here? The drift from infrastructure to ideology
Much of the increase in spending — past and projected — has been disproportionately directed toward initiatives aligned with the 'four wellbeings' (social, cultural, environmental, and economic). These priorities relate to the 2019 amendments to the Local Government Act, which shifted councils' focus from the delivery of 'good quality local infrastructure and services' to a much broader and more ambiguous mandate.
Wellington City Council embraced this with unbridled and well-meaning enthusiasm. See the projects above and the continuing commitments to cycleways, the Golden Mile, organic waste collection, a huge expansion in the parks and reserves budget to take on running Crown - iwi land on Miramar peninsula, commitments to the living wage for employees, contractors and employees of contractors. All earnest, but all expensive — and all paid for, ultimately, by the same number of ratepayers.
A new vision
So what now? First, Wellington must axe poor-value spending. Every dollar spent by the council must deliver measurable public value. Too often, this hasn't happened: from a $3m purchase of EV chargers languishing in a warehouse, a $0.6m bike rack hardly used, $2m on golf club subsidies, to poorly evaluated mega-projects whose business cases look shakier year by year.
Second, the core must come first. That means pipes, parks, roads, lighting, litter, and keeping our city clean and tidy must be at the very centre of council's mission. Distractions, no matter how fashionable or well-intentioned, must not be allowed to take precedence.
Third, we need a 'course correction' on future spending, targeting large savings that enable genuinely lower rates. Options could include a sinking lid on staff numbers, deferring non-essential capital projects until business cases and central government guidance are clear, and pitting every dollar of planned expenditure against an ironclad test: does this build basic infrastructure, or support a well-maintained, safe, attractive city?
Some big questions must be asked: What are the 'wellbeing' consequences to all ratepayers of our Long-Term Plan expenditure: $152 million funding Takina's losses? over $900 million on social housing? Can a city of 75,000 households afford to subsidise a zoo by $120 million? Do our ratepayers have the financial capacity to spend a further $173 million maintaining and building new cycleways?
The council must also pursue new revenue and efficiencies. There are plenty of opportunities: selling surplus road reserve to residents, revisiting unduly generous rates remissions, rethinking unprofitable venues, and abdicating strategies, like social housing that duplicate central government's role.
A different future is possible — our modelling suggests $2.8 billion could be saved out to 2034, if all levers are pulled. This could help freeze or even roll back rates, giving households, businesses and those looking to make Wellington their home, much-needed breathing room. This is not about mindless austerity, its about restoring trust, accountability and efficiency. Importantly, leaving more money in ratepayers' pockets is key to restoring confidence.
Infrastructure is not glamorous, but it's (almost) everything
Cities thrive or falter on their infrastructure. The pipes, roads, lighting, and public facilities are the quiet enablers of everything else we call wellbeing: jobs, affordable housing, a vibrant arts and cultural life, hospitality, and above all, a sense of safety and pride. Neglect infrastructure, and everything else starts to fray and becomes unaffordable.
Focusing on the basics isn't nostalgic conservatism - it's a radical act of care and hope. It says to existing and future residents, business owners, and investors: Wellington is a place that works, a city where the fundamentals are solid and reliable. Wellington can be a place to establish a life and family, pursue meaningful work, and build a business with confidence. Only with the essentials secure can 'wellbeing' be more than an empty slogan.
Opportunity through affordability
Wellington's unique blend of natural beauty, creativity, and accessibility remains its greatest asset. But none of it can be leveraged if costs chase away the next generation, if businesses decide expansion is too risky, or if the basics become unaffordable.
By fiercely refocusing on infrastructure and reigning in spending, the council can set Wellington back on a path to prosperity — a city where 'live, work, play' is not just a catchphrase, but a genuine, affordable possibility for all.
It's about unlocking our potential.
A vibrant Wellington cannot be built on affordable rates alone - but affordability unlocks opportunity.
Wellington must actively foster a business-friendly environment. Our businesses are engines of growth, innovation, and employment. Reducing the punitive commercial rates differential is critical — Wellington's future depends on a council that anticipates and supports business needs through sensible policy, efficient consents, robust infrastructure, and openness to innovation.
As the capital city, Wellington's greatest strength should be its close connection to the Government - the region's largest employer and economic driver. It is vital, therefore, that the council cultivates a strong, collaborative relationship with ministers of all stripes. Wellington is uniquely positioned to capitalise on national initiatives aimed at boosting investment, productivity, and infrastructure development.
Recent reforms and Budget 2025 measures, including tax incentives for capital investment and streamlined business compliance, demonstrate a clear commitment to economic growth. The current seismic review is particularly pertinent to our city's future and affordability. The council must actively leverage these policies, advocate for fair and adequate funding — particularly for social housing and key infrastructure — and avoid duplicating functions that drain resources or hinder private sector dynamism.
Why does Wellington not have, as a city and a region, a deal in front of the Government for discussion?
By aligning with Government priorities and making the city hospitable to business growth, Wellington can spark new jobs, stimulate housing development, and elevate living standards. A productive, respectful partnership between local and central government, alongside a council that values economic vibrancy as a means to social wellbeing, can reverse our drift and secure Wellington's reputation as a sustainable, livable, and prosperous capital.
No one loves Wellington more than Wellingtonians*. It is that deep-rooted passion and pride that fuels our collective courage to demand better — better leadership, better stewardship, and a better city where affordability, infrastructure, and opportunity come together to create a thriving home for all who live, work, and build our futures here.
* Paul Ridley-Smith and Louise Tong are two such fervent Wellingtonians. This article was written in a personal, not professional capacity and crafted on a best-efforts basis with regard to the accuracy of the facts and figures presented. This article is a synthesis of content from presentations at the Vision for Wellington event 'A Capital Challenge', available here.