Wellington City Council pays more staff a living wage, costing ratepayers $1.7m
Wednesday, 28 October 2015
Wellington City Council is sticking to its guns on the living wage – a move that could cost it an extra $1.7 million and expose it to costly legal action.
The council, which has been paying its own staff a living wage since 2013, took the bold step on Wednesday of requiring contractors who provide its security services to do the same.
In doing so, it flew in the face of warnings from its own officers and chief executive Kevin Lavery that it would effectively be paying 19 per cent more than the going rate for guarding, noise control and cash collection services over the seven-year life of the security contract without seeing any extra benefit.
The ongoing impact on ratepayers remains to be seen, but councillors also voted eight to seven to cut personnel and staff travel costs by $250,000 a year for seven years to help balance the books.
Lavery did not mince words at Wednesday's council meeting.
He told councillors they were asking him to implement something the council's lawyers felt was illegal, as the Local Government Act prohibits councils from paying more than necessary for services without any corresponding benefit.
There was a very real risk the council could be taken to court, and could lose, he said.
The living wage is considered to be the hourly rate a worker needs to pay for the necessities of life, and participate as an active citizen in the community. That amount is currently calculated at $19.25 per hour, 30 per cent more than the adult minimum wage of $14.75, although the council's interpretation is $18.55.
Before voting on whether to extend the policy to security contractors, councillors were told by representatives of Retail NZ and the Wellington Employers Chamber of Commerce that setting the wages of private companies would be setting a dangerous precedent.
Raising rates to cover the extra wages could hurt local businesses, which already provided 47 per cent of the rates take, they said.
But councillors also heard from Wellington security guard Tipo Panapa, who said earning the minimum wage made him feel undervalued for the difficult work he does.
His dream was simply to earn enough money to take his paraplegic father to Lyall Bay for fish and chips on the beach once a week, he said.
In the end, councillors voted 9-6 in favour of extending the living wage policy.
Wellington Mayor Celia Wade-Brown supported the move, saying initiatives such as the Christmas parade and free CBD wi-fi were not necessarily the most cost-effective, but the council paid for them because they made Wellington a better place to live.
Nicola Young said the Government should be raising the minimum wage instead.
Either the city's rates would blow out, or services would have to be cut, she said. 'So will we shut swimming pools or reduce the hours at our libraries? We haven't been told. This smacks of developing policy on the hoof.'
HOW THEY VOTED ON THE LIVING WAGE
For: Celia Wade-Brown, Justin Lester, Sarah Free, Iona Pannett, Helene Ritchie, Ray Ahipene-Mercer, David Lee, Paul Eagle, Mark Peck.
Against: Andy Foster, Jo Coughlan, Simon Woolf, Simon Marsh, Nicola Young, Malcolm Sparrow.
An earlier version of the story said the cost of the living wage would be an extra $2.4m. That figure was based on an earlier report to councillors which has since been updated.