Wellington Chamber of Commerce

Media Statement
29 October 2015
Council ignores own legal advice, Chamber to consider options

Wellington Chamber of Commerce intends to consider all options available in light of the city council’s decision to require that a private contractor pay its employees the Living Wage while it is doing work for the council.

Councillors last night voted to reject officer’s recommendations and instead vote in favour of alternative recommendations by 9 votes to 6.

Chamber Chief Executive John Milford said the Chamber’s position would be decided at a governance meeting to be held over the coming days.

“We now need to consider all available information to fully inform our next steps and the impact of these alternative recommendations.

“We will make the request to the Council for all relevant material, including a full copy of all legal advice received to date.

“For this one, third party, security contract alone, requiring the Living Wage to be paid would create a significant cost to the council by its own estimates in the region of $2.4 million across the seven-year life of the contract. And that cost is likely to mean an approximate increase in the total contract price of 19 per cent.

“To illustrate the perverse, illogical and unfair outcomes that will flow from such a policy, we have to remember that this is for a shared services contract with Porirua and Kapiti. The outcome here is that the security company will be instructed by Wellington Council to pay different wage rates for the different locations, to their same staff, for the same job.

“This is using public money to pay a third party for the same contract, for the same service, for the same outcomes, with we believe no extra value added to ratepayers or council for this extra cost.

“We do not believe that this is prudent stewardship or efficient and effective use of resources, nor is it a function that is cost-effective for households and businesses. That is councillors’ clear legal obligation under the Act, and we will now ask for further information, consider further legal advice, and our governance board will meet to consider what the next steps are.

“Even the council’s own lawyers agree. They said that if the council took this course it “is at risk of being found to have acted outside of the purpose of local government as set out by sections 10 and 11 of Local Government Act”. They also said the changes would be unlawful because “the increased cost that arises as a consequence of the living wage should allow for a corresponding increase in the quality or effectiveness of the particular service being provided” and “in this case it is considered that requiring Supplier 2 to implement a living wage cannot be justified in terms of improvised quality and/or effectiveness.”

“Ignoring your own officials’ advice and forcing third-party contractors to pay a certain level of wage or face losing the council’s business is most concerning. That not only puts Wellington jobs and businesses at risk, it goes well beyond the council’s authority.

“Any action we would not take lightly, or have any great delight in, but the Local Government Act is there to ensure good governance and protect ratepayers’ interests.”

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