With local elections underway across the country, rates are a particularly hot topic. Minister Watts (Local Government) claims that councils have "lacked fiscal discipline", and this has contributed to the rapid increase in rates in recent years. The government's argument is that councils have been spending money on "nice to haves" - though exactly what they think falls into this category is unclear - at the expense of the basics of roads, water, waste, and other core services.
In our feature article, we fact check Minister Watts's claims and find them wanting. What the data suggest is that the biggest driver of rates inflation is the rising cost of delivering basic infrastructure - the very infrastructure the government has scolded councils for supposedly neglecting. Roads, water supply, sewerage systems, community buildings: these have all become significantly more expensive to build and maintain over recent years. Historic underinvestment in this infrastructure is likely adding to this fiscal pressure - when old, neglected pipes begin to burst they are very expensive to repair.
In our regular updates, we cover the quarterly data release on GDP. The New Zealand economy experienced a sharp contraction in the June 2025 quarter. Once again, the return to growth has been postponed. The ongoing recession has now been deeper and lasted longer than that following the global financial crisis of 2008.
We also provide updates on the balance of payments data, the monthly inflation data, and the most recent performance and confidence indexes. As usual, we provide a snapshot of wage and employment data on pages 3 and 4. For more detailed analysis of the latest wage, employment, social welfare data, and consumer inflation data, please see the August Bulletin.
