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Living Wage Litigation

LIVING WAGE LITIGATION – A NEW ERA IN LOCAL GOVERNMENT ACCOUNTABILITY OR A DEAD END?

Wellington Chamber of Commerce, in conjunction with the New Zealand Taxpayers Union, has issued a judicial review of the decision by Wellington City Council to require its independent contractors to pay their employees the “living wage”. The Chamber is asking the High Court to rule on whether the Council’s decision represents an efficient, effective and appropriate use of ratepayers’ money for the purposes of the Local Government Act 2002 (the cost is estimated at $1.7 million over 7 years).

The Chamber’s case attempts to break new ground by inviting the High Court to assume the role of financial controller for local authority spending. In the past, the courts have been reluctant to undertake reviews which challenge the merits of decisions made by councils. In 1996, the Court of Appeal ruled that the Courts should defer to elected council members on matters of policy “except in clear and extreme cases”.

Nick Russell, Chen Palmer Litigation Partner, said “The law governing local councils has changed since then, and the Court will need to decide whether that principle still applies to decisions made in 2015. Ultimately, the Chamber is asking the Court to rule on whether spending decisions made by democratically elected councils should be subject to judicial oversight, in addition to the democratic accountability provided by local elections.”

“If the Court upholds the Chamber’s claim it will have extremely far reaching consequences for local government in New Zealand, as it has the potential to open up a wide range of spending decisions to scrutiny in the High Court. It would provide disgruntled ratepayers with a powerful new weapon to hold councils to account, but it would also risk making local government decision-making slower and more expensive – a cost ultimately borne by ratepayers. The Court will have to grapple with these implications in deciding whether the final word on the matter rests with the judiciary or the voters of Wellington,” said Mr Russell.

Chen Palmer specialises in advising on public law litigation and public policy.

ENDS

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