Rates charged by local authorities in New Zealand have risen by an average of 12.8 per cent, the New Zealand Taxpayers' Union says.

Rates are rising across New Zealand at almost five times the speed of inflation.

During the past three years, rates charged by local authorities have risen by an average of 12.8 per cent. At the same time, total inflation has equalled 2.6 per cent, according to figures released by the New Zealand Taxpayers' Union.

The lobby group released its second Ratepayers' Report on Tuesday, which compares the performance and financial position of every local authority in the country.

STUFF The Mackenzie District is home to the country's cheapest residential rates, according to a union report.

The report shows the debt per residential ratepayer has increased on average by 6.8 per cent nationally, but some local authorities have experienced a much greater increase. Auckland Council is the second most indebted council in New Zealand owing $22,189 for every ratepayer, up 34 per cent from $16,555 in 2014.

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Christchurch City Council followed closely behind Auckland, owing $21,431 for every residential ratepayer, up 44 per cent from $14,810 in 2014. Auckland and Christchurch's debt per ratepayer was three times the national average of $6989. Waitomo District Council was the most indebted per ratepayer. It owed $24,600 for each of its 2454 ratepayers.

Taxpayers' Union executive director Jordan Williams said the data showed debts were continuing to increase, even on a per person basis, which was a worrying trend.

Property Council of New Zealand government relations director Matt Paterson said he was not surprised debt levels were going up because councils were having to cater for a lot of unexpected growth.

"Building cities costs a lot of money and providing infrastructure to cater for that growth is a large part of that."

Paterson said increasing debt was quite a sensible reaction, especially when councils were not expecting such growth.

He said using the rating system to fund capital expenditure was an "out of date and unsustainable" model that was never going to deliver the infrastructure and housing that was needed.

"There's a real need for innovative solutions for council funding."

The report also details rates increases across councils and shows Western Bay of Plenty District had the most expensive average residential rates in both 2014 and 2017 ($3274 and $3234 respectively).

At the other end of the scale, the Mackenzie District Council had the cheapest residential rates in the country at $1637. The district also recorded the largest percentage increase nationwide, of 48 per cent from 2014 when rates were $1104.

Mackenzie Mayor Graham Smith said the council's debt was low, so ratepayers were not being rated for debt. According to the report, the Mackenzie District had $1063 of debt for each of its 2704 ratepayers, much lower than the $5576 average for rural councils.

"We're definitely a small, but very efficient council," Smith said.

He signalled another rate increase of about 7 or 8 per cent for next year, saying the council was working off a low base and was in "catch up mode".

Local Government New Zealand president Dave Cull said it was difficult to compare each council because they provided different levels of service and catered to different needs including housing, tourism and infrastructure.

He defended the rate increases, saying councils' costs were increasing at different rates to overall inflation.

The average rise in local government costs was 3 per cent annually, Cull said.

"Just to stand still you would have, on average, a rise of 3 per cent a year; if you want to do more, then clearly you'd have to go up further."

Cull said total debt was growing but it was largely a result of the bigger cities like Auckland building infrastructure to cater for a record number of migrants.

Councils were not able to invest in infrastructure without raising capital somewhere.

He said the Christchurch City Council obviously had to raise its debt level to rebuild the city after the earthquakes.

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