The Napier City Council has come under fire from a national lobby group over a recent rates increase, which as been labelled "totally unjustified".

Last week the council agreed to increase rates by 4.9 per cent for the 2017-2018 year.

The increase had been slated as 3.9 per cent, but at Wednesday's meeting the council agreed to raise rates a further 1 per cent for water-related costs.

This $502,000 would relate to the council's additional focus on its potable water supply, and "to costs associated with changing industry expectation around public water supplies following the Havelock North Government Inquiry".

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Napier's water supply is now in its sixth week of chlorination - this began after the supply tested positive for E.coli for the second time this year.

In response to the 4.9 per cent increase, New Zealand Taxpayers' Union executive director Jordan Williams said a rates hike that was twice the size of Auckland's was "totally unjustified".

The Auckland Council agreed last month to increase general rates by 2.5 per cent for this financial year.

"Don't be fooled by the council's spin," Mr Williams said. "The 5 per cent hike is five times the amount needed for the costs of the water supply upgrades which councillors are trying to use to justify their vote.

"Last year, total expenditure at the council was $86 million. Rather than finding less than 1 per cent of efficiencies for the $500,000 needed to deliver safer drinking water, the politicians took the easy option," he said.

"Councillors chose to dig much deeper into ratepayers' pockets, rather than look at any of their own existing spending."

In response, yesterday Napier City Council chief executive Wayne Jack said the rates rise was a total increase including services, waste and water.

The Auckland Council had a separate charge for water and wastewater pricing, he said.

The 4.9 per cent increase - which came into effect at the weekend - is less than the 5 per cent increase set out in the council's Long Term Plan 2015-2025.

In the city council's capital plan $51,260,000 has been budgeted to be spent for the next financial year.

Mr Williams said the taxpayers' union's Hawke's Bay members were looking into starting a dedicated ratepayers' group to fight for better value for money.

"[Last week's] vote suggests that can't come soon enough."