The cost of living across Australia and New Zealand has become a harsh reality for many. Homeownership is slipping further out of reach, rents are rising unsustainable, and everyday expenses are stretching household budgets to their limits. Inflation remains stubborn, interest rates squeeze mortgage holders, and economic stagnation leaves businesses and workers with fewer opportunities. While national leaders debate the best way forward, local councils deal with the fallout in real time. They cannot afford to wait for top-down solutions—they must act now to safeguard their communities.
Councils play a crucial role in keeping communities functioning. They are responsible for maintaining infrastructure, delivering essential services, and ensuring local economies remain viable. At the same time, they rely on rates revenue to fund these services, making them acutely aware of the financial strain on households and businesses. The challenge they face is not just about managing rising costs; it is about ensuring that they continue to provide vital services without burdening ratepayers who are already struggling. This is where thoughtful financial planning becomes essential.
Rate-setting has always been a delicate balancing act, but the stakes are even higher in today’s economic climate. There is increasing pressure on councils to freeze or significantly limit rate increases in response to the financial struggles of households. While this may seem like a compassionate solution in the short term, it is a dangerous trap that could lead to even more significant financial pain down the road. Holding rates artificially low does not eliminate costs—it simply defers them, creating a snowball effect where maintenance backlogs grow, infrastructure deteriorates, and councils eventually face massive catch-up costs that force rates to spike dramatically.
The reality is that local infrastructure—roads, water systems, public facilities—must be maintained, repaired, and eventually replaced. Deferring necessary work only leads to more significant expenses in the future. Roads that could have been resurfaced now for a moderate cost may need a full reconstruction later at an exponentially higher price. Water networks without upgrades become more prone to failures, increasing emergency repair costs. Essential assets, from public buildings to stormwater systems, become more expensive to replace as inflation and construction costs rise over time. When councils delay this spending to keep rates artificially low, they are not saving money—they are simply pushing more significant financial burdens onto future ratepayers.
In addition to rising infrastructure costs, suppressing rate increases can also lead to increased council debt. When revenue falls short but essential services must continue, councils often have no choice but to borrow more. This leads to higher interest costs, which ultimately must be repaid—often requiring even larger rate increases in the future. The longer necessary adjustments are avoided, the worse the financial position becomes, making it harder for councils to recover without drastic measures.
This is why responsible rates modelling and long-term financial planning are crucial. Councils need to take a strategic approach that balances affordability for today’s residents with the sustainability of future finances. A steady, predictable approach to rates increases—based on real data and forward projections—helps prevent financial shocks and ensures that services remain reliable. Councils that use robust modelling can assess different economic scenarios, allowing them to plan rate structures that avoid sudden, unsustainable spikes while keeping infrastructure investment on track.
Beyond rates, councils must also consider how they invest in their communities. With household budgets under pressure, now is not the time for poorly planned spending or politically driven projects that offer little long-term value. Instead, councils must prioritise investments that create lasting benefits—maintaining critical infrastructure, improving water and transport networks, and ensuring that essential services remain accessible. Every dollar spent must be accounted for, with a clear strategy to ensure it delivers real value to residents.
Economic pressures are also affecting households and businesses. Small businesses, in particular, are struggling with rising costs, reduced consumer spending, and higher interest rates on loans. Councils support local economies by reducing bureaucratic barriers, fast-tracking approvals for business development, or ensuring that commercial rates are structured in a way that does not drive businesses to the brink. A thriving local economy benefits everyone, creating jobs and sustaining the community’s financial health.
At the heart of all of this is the need for transparency and engagement. Ratepayers are more likely to support council decisions when they understand their reasoning. In times of economic hardship, councils must proactively explain their financial strategies—demonstrating where rates revenue is going, how investment decisions are being made, and what steps are being taken to keep costs under control. This transparency fosters trust and ensures that councils remain accountable to the communities they serve.
Councils are undoubtedly facing significant financial challenges, but they are not powerless. Unlike national governments, which can afford to delay decision-making, councils operate on the frontline. They see the impact of the cost-of-living crisis every day and are in a position to take direct action. They can navigate these challenges through smart financial planning, responsible investment, and genuine community engagement while ensuring their communities remain financially resilient.
