Bringing The Living Wage To Life

How to create a legal mechanism to promote social justice

by Gordon Campbell

The Living Wage campaign has done the calculations. Essentially, a Living Wage would require a wage level of $18.40 per hour, or $736.00, before tax, for a 40-hour week. This would not be to deliver the middle class ideal of home ownership. It is the income necessary to support the basic necessities of life, and to enable people to feel they belong to society : as the campaign website puts it, “a living wage that will enable workers to live with dignity and to participate as active citizens in society.” The scary thing, as No Right Turn points out is that the Living Wage calculations include government subsidies such as Working For Families, and that underlines just how far this country’s private sector wage rates have fallen :

Its an example of how ingrained the culture of low pay has become in our society: it is now seen as a core duty of government to effectively subsidise corporate profits (and hence the incomes of the wealthy) by compensating for their sub-standard wages. We spend over a billion dollars a year doing this; meanwhile the idea of government regulating for decent wages (or even paying them itself) is apparently now politically unthinkable for the major parties.

So….where do we go from here in order to make the Living Wage become a reality? Not to mention to achieve a Universal Basic Income that can address the income/participation needs of the unwaged on benefits who could miss out on the Living Wage, just as they do not qualify for the Working For Families subsidies at present.

One way forward would be to vote for political parties who promise to regulate for a Living Wage and to increase the benefit levels. (Good luck with convincing the Labour Party to do either.) There is another avenue however. The political parties could be pressured to amend the New Zealand Bill of Rights Act, in order to put social, cultural and economic rights on the same legal footing as the civil and political rights that we already recognize under BORA. That way, people would have a legal mechanism to seek a decent standard of living as a fundamental right, and not as an act of charity bestowed by employers and/or by benevolent governments. It would also mean that all future legislation would have to be vetted for its impact on the standard of living – and for the extent, for instance, to which it may contribute to economic hardship and income inequality. Any retrogressive socio-economic legislation would then need to justify its existence.

This may sound like airy-fairy stuff. It isn’t. It might be the only way to escape from the whims and expediency of the government of the day. And luckily, the intellectual spadework has already been done. Wellington-based lawyer Joss Opie wrote his law thesis on the subject, and that’s available online (click item 6 on the list here.)

Fortunately, Opie has also published an accessible version of the same arguments in an article catchily entitled “A Case For Including Economic, Social and Cultural Rights in the New Zealand Bill of Rights 1990” published in last September’s issue of the Victoria University Law Review. That article is behind a paywall here.

Because of the paywall, I’ll try and summarise Opie’s arguments.

It probably isn’t a surprise that Geoffrey Palmer and the Labour government of the 1980s did not give legal recognition to economic, social and cultural rights (call them ESCR) in the 1990 Bill of Rights. Doing so might well have put a legal brake on the Rogernomics reforms, and invited the courts to weigh the social impacts against the wider good. The fourth Labour government did recognize civil and political rights – which constrain the powers of government – but it omitted ESCR, which it took to be more about what the public could legitimately expect of government. For the state to voluntarily constrain its powers was one thing – but giving people the right to challenge the socio-economic policy being tested on them was something else again.

Giving the two sets of rights a different status under our Bill of Rights makes little obvious sense. New Zealand has signed the International Covenant on Economic, Social and Cultural Rights and this took effect in December 1978. Article 11 affirms “ the right of everyone to an adequate standard of living for himself and his family, including adequate food, clothing and housing and to the continuous improvement of living conditions.” – which clearly, the Living Wage campaign is still seeking, 35 years down the track. Article 7 affirms the right to “ remuneration which provides all workers, as a minimum…with a decent living for themselves and their families in accordance with the provisions of the present Covenant.” As Opie notes, the Covenant recognizes that some of the rights identified are capable of being met only over time : however, signatory countries did pledge themselves to the gradual realization of these rights :

States parties do not have to guarantee most of the Covenant rights immediately and in full. Instead, they undertake to take steps, to the maximum of their available resources, to realise progressively rights such as the right to social security or the right to adequate housing, until full realisation is achieved.

(Signatory governments also pledged not to take retrograde steps that would frustrate those rights, unless these can be shown to advance the general well-being of society) Given the current political debate on affordable housing, all of the above still seems highly relevant. In his VUWLR article, Opie tackles an actual case heard in 1996 that dealt with the state’s obligation to provide adequate and affordable housing for the poor. Lawson vs Housing NZ was brought by an elderly married couple (she in her 70s, he an 80-plus man in ill health) who were seeking judicial review of the Bolger government’s imposition of market rents on the home they had lived in for 49 years.

Opie analyses the actual court decision from two angles. One, the actual situation where the presiding judge considered himself unable to consider ESCR – and secondly, how that case ( and similar cases today) might pan out if the courts did possess that power. There is little doubt the Lawsons (and everyone since seeking state provision of adequate, affordable housing) would have fared far better with the ESCR protection, than without it. More on the Lawson case, below.

Why did Palmer and the fourth Labour government include the civil and political rights contained in the UN’s International Covenant on Civil and Political Rights within our Bill of Rights – while carefully excluding the economic, social and cultural rights set out in an equally important UN Covenant? Hadn’t New Zealand signed both documents, and doesn’t the rest of the world tend to treat them as complementary? Opie, again :

While the [BORA] Bill’s preamble referred to New Zealand’s ratification of the International Covenant on Civil and Political Rights (ICCPR) there was no reference to the ICESCR, and ESCR were intentionally omitted from the Bill. The reasons given for this in the White Paper [largely the work of Geoffrey Palmer] were that while the Bill should “capture and protect the continuing essence of our constitutional and political system”, it should not “attempt to capture (or more accurately to impose) a temporarily popular view of policy.” CPR were seen as “value free”, but ESCR were characterised as an attempt to “freeze into a special constitutional status substantive economic and social policies.”

These distinctions seem utterly arbitrary and self serving – especially when advocated by a government whose economic reforms had devastated the economic, social and cultural security of thousands of New Zealanders. Can giving legal protection to what New Zealand and the rest of the world had recognized as fundamental rights really be written off so blithely as a surrender to “ temporarily popular views of policy”?

Hardly. The Justice and Law Reform Select Committee that heard submissions on BORA didn’t think so, either. It felt that civil and political rights actually go hand in hand with ESCR. That may be why, in its final report, the committee said :

Fundamental social and economic rights … are obviously as important to New Zealanders as the civil and political rights in the White Paper draft…. In Appendix A the Committee suggests that some of these major specified rights could be included. It is recognised that effective exercise of civil
and political rights depends on securing an adequate standard of living, housing, health care and education.

Exactly. Today, the Living Wage campaign would agree. However, the Labour government proceeded on its set course. In 1992, Palmer justified his position in these terms :

To broaden a Bill of Rights so that it encompassed such broad policy questions would have made it unmanageable in my view and opened it up to ridicule. It also seemed to me that to state as fundamental rights matters which it was not within the power of government to deliver would cause expectations to rise, only to be dashed.

Hope – and need – continue to arise despite Palmer’s desire for constitutional tidiness. In a 2006 speech footnoted in Opie’s article, Palmer added for good measure that New Zealand judges just weren’t up the job, anyway. In his view, New Zealand’s judges did not have the requisite “background or capacities” to adjudicate on “social policy”. A few years previously – before the Zaoui case brought our judges up to speed – the same patronizing attitude used to exist about the ability of New Zealand courts to adjudicate on security issues as well.

Back in the real world, the battle to convince a succession of Labour and National-led governments to recognise economic, social and cultural rights continues. Would putting ESCR into the Bill of Rights really make a difference? Well, giving recognition to civil and political rights has made a difference, as Palmer has gladly trumpeted. Opie again :

Various commentators consider that the NZBORA has had not only an important impact in CPR [civil and political rights] cases, statutory interpretation and law-making, but also on policy. Palmer has contended that the statute has been “a set of navigation lights for the whole process of government to observe”, and that it has led to more principled governance in New Zealand.

No such luck on social economic and cultural rights, largely as a consequence of their deliberate exclusion :

It….follows that because ESCR are not generally included in the NZBORA or the HRA [Human Rights Act] they have a much lesser effect on statutory interpretation, law-making, and policy than they otherwise would. For example, because the NZBORA does not affirm ESCR, those rights fall outside of the state’s obligation to interpret statutes consistently with the NZBORA’s rights where possible; and outside of the review that the Attorney-General conducts of each Bill in order to comply with s 7 of the NZBORA. Further, while the Cabinet Manual requires that Ministers identify potential inconsistencies between Bills and “international obligations” (which include New Zealand’s obligations under the ICESCR), there is little evidence that proposed legislation is analysed for compliance with ESCR.

In other words, the omission has left a rather gaping hole in the way we devise and interpret legislation in New Zealand. The problem is not that our laws do not recognize ESCR at all – our health and safety provisions, minimum wage provisions, aspects of ACC and employment law (eg such as personal grievance measures) and such statutes as the Housing Act and Social Security Act protect and enforce certain aspects of ESCR. The problem is that the approach is so piecemeal. The protections on offer are limited, often indirect, and asre easily treated as the token afterthoughts that the politicians no doubt intended them to be. Often, the “social responsibility” clauses dotted through our social legislation are floating in space as mere acknowledgements that are all too easily brushed aside. Yet if ESCR had been embedded in our Bill of Rights, the injunctions on government and government departments to be socially responsible might finally get some teeth :

The critical difference between CPR and ESCR in New Zealand domestic law is that the law does not recognise ESCR themselves as fundamental, justiciable rights. As Geiringer and [Matthew] Palmer state, “[w]hat the New Zealand courts lack is the ability to test state and/or private action against broad [ESCR] protections. ”

Can we put this all down to being wise after the fact and exonerate the fourth Labour government? To be fair, Geoffrey Palmer’s objections in the White Paper to embedding ESCR were in a context when our fledgling Bill of Rights was being contemplated as supreme law, able to knock down other statutes. Ultimately though, it ended up as just another statute. All the more reason, one would think, to now embed the ESCR in a BORA no longer able to directly impinge on other statutes.

In passing though, it is worth thinking about the situation if our Bill of Rights had been given the status of supreme law. The United States and the United Kingdom – countries with far more complex systems of governance and incorporate than oiurs, and with many more checks and balances – cope with (a) US Supreme Court rulings and (b) Strasbourg findings on human rights. Do we really want to argue that the relatively simple New Zealand political system cannot cope with social, economic and cultural rights being protected by a far weaker kind of statute?

There is another, far better reason why these rights need protection by the courts. For much of the past 30 years, successive governments have seen fit to carry out socio-economic experiments of a very extreme nature. As Opie says :

The Labour Government…. went well beyond moderate reform. Instead, it carried out radical neo-liberal reforms of New Zealand’s state institutions and its economy, at great speed. The National Government continued this agenda following its election in 1990. In 1993, The Economist described these reforms as “more radical than any other industrial country’s”

As Opie demonstrates with chapter and verse, at the time the Bill of Rights was passed in 1990 there were already clear signs of the havoc that the economic reforms were wreaking on the social fabric of New Zealand – to the point where the deliberate exclusion of what could have been a useful safety net now looks inexcusable. For example:

Unemployment in the general population, seen as the natural consequence of a dynamic economy, rose from 3.8 per cent in 1985 to 7.7 per cent in 1990 and to 11.1 per cent in 1991. Figures for Maori and Pacific Islanders were much worse. This was largely due to heavy Maori
and Pacific Island dependency on unskilled wage labour, which the State had traditionally provided. When that work was cut back dramatically, Maori and Pacific Islanders suffered disproportionately and severely.

These figures are worth retrieving from the memory hole, if only because the communities affected are still enduring the consequences. Citing the economist Paul Dalziel, Opie notes that in 1991 the Household Labour Force unemployment rate for Maori was 27.1 % compared to 7.7 % among Europeans. The Polynesian rate was 28.6 per cent.. “It is not easy to imagine,” Opie writes, “ what having more than one in four workers unemployed does to a community – but for comparison, note that at the height of the Great Depression, the United States unemployment rate peaked at just under 25 per cent in 1933. That experience seared the psyche of the whole nation, and led to a range of institutional and policy reforms to prevent its recurrence.”

Needless to say, no comparable healing steps have been taken in New Zealand. Opie continues :

Income inequality grew, as did poverty. Between 1989 and 1992, “the number of New Zealanders estimated to be living below the [unofficial] poverty line rose by at least 35 percent.” As the number of people on benefits grew (almost doubling between 1984 and 1990), the value of benefits was reduced….Substantial cuts in education ($380 million) and health ($192 million) were also implemented. In addition, the Government began to charge for services which it had previously provided for free, or to increase charges. This included fees for tertiary education, which were raised significantly in 1990.

In other words, as tank was being driven through the economic, social and cultural rights of hundreds of thousands of New Zealanders, rights which the New Zealand state had solemnly promised the world it would protect :

A considerable increase in social distress became evident. Between 1974 and 1990 the rate of male suicide rose by 288 per cent, “with the greatest increase in the late 1980s.” Between 1991 and 1993, the Salvation Army registered a 1,117 per cent rise in the use of its food parcel service.

There is a point to repeating these figures, which could otherwise seem like ancient grievances. The point being that the ballot box had offered little in the way of protection, since successive Labour and National governments had routinely broken their election promises, eventually motivating the adoption of MMP as a brake on the abuse of executive power. The courts stood by, impotent, while all this happened. None of the architects of the abuses of this period in our history have been held to account – indeed, several have been knighted. Yet the social consequences are still with us, largely because the same economic policies (and punitive approach to those on benefits) remain in place. Given the history and consequences of this onslaught, the fact that the current New Zealand Bill of Rights continues to offer so little in the way of protection surely needs to be revisited. Opie puts it like this :

[Both] before and after the NZBORA’s enactment – the purpose of which is “to affirm, protect, and promote human rights and fundamental freedoms in New Zealand” – a series of retrogressive measures were taken which directly impacted upon the levels of realisation of New Zealanders’ internationally recognised ESCR. However, the lack of free-standing ESCR in New Zealand law meant that there was little scope for challenging any of the reforms on a legal basis, despite the fundamental human rights interests at stake.

In fact, none of the above is ancient history. We are living with the consequences. What the Living Wage Campaign appears to seek is a re-assertion of those “ fundamental human rights interests” by pinpointing the income required to meet them at their most basic levels, in 2013. Would having ESCR formally recognised in our Bill of Rights be a useful tool in reaching that goal? Undoubtedly. The affordable housing case that Opie analyses forms one of the most convincing part of his argument.

As mentioned above, the Lawsons were an elderly couple (one in ill health) who were subjected to National’s shift from subsidized to market rents – a policy phased in over four years from 1991. The Lawsons sought judicial review of that policy. In finally dismissing their application, the judge’s reasoning was just as striking for what he felt he couldn’t do – largely because he felt the Lawsons’ social and economic rights had to be treated as lying beyond his ability to consider – as for what he did focus upon.

Some of the reasoning still seems extraordinary. For instance : if Housing NZ had to consider the social and economic rights of the likes of the Lawsons, the judge reasoned, this would put them at a competitive disadvantage to private sector landlords, and inhibit Housing NZ’s ability to function as a business. (So much for the token social responsibility clauses in the housing legislation.) The government and Housing NZ knew full well what market rents would do to the likes of the Lawsons :

…[In] 1993, the Chair of the HNZ Board wrote to the Prime Minister, advising him that a rent increase planned for November 1993 would particularly impact on approximately 9,000 retired persons, mainly women, who would generally not be able to find alternative accommodation. These
people had in the past been the best tenants. The increase would result in their paying more than 40 per cent, and in some cases more than 50 per cent, of their income on accommodation. The Chair advised the Prime Minister that this would cause “considerable individual distress”.

The Government, however, decided to proceed with the rent increase apparently without implementing any of the remedial strategies the Chair suggested, on the basis of advice that “the figures might have been overstated”. Therefore, the Government not only knew that the availability of adequate housing in the market was limited, but also knew that its reforms would force many tenants out of their current properties (indeed that was its intention) and simultaneously increase demand for smaller properties which were already oversubscribed. Despite this, the Government appears to have simply assumed that adequate housing would somehow be provided by a combination of market forces, HNZ, private landlords and the accommodation supplement. This assumption was apparently incorrect.

Nothing much has changed about that “market will somehow deliver” stance in the years since. In dismissing the Lawsons’ pleas to review Housing NZ’s market rents policy, the judge found himself with limited resources to bring to bear, absent any evidence of fraud or corruption in the creation or application of the policy. According to the judge, the decision to increase rents was ‘ purely commercial.’ As mentioned above, the court considered that finding in favour of the Lawsons would put Housing NZ at a competitive disadvantage – in that it would have to charge less than private landlords, which would distort the housing market. (A bigger sin, evidently, than the ongoing failure of market forces to deliver a sufficient supply of affordable housing in Auckland.)

Although, as Opie says, the judge did acknowledge that the housing reforms had had “a seriously adverse effect on [Mrs Lawson’s] financial position and on those who are similarly situated”, the judge also found that “any hardship which she experienced is insusceptible to judicial review.” In relation to Mrs Lawson’s claim regarding the right to life, the judge found that “an unduly strained interpretation” of the right would be required for it to apply to Mrs Lawson’s circumstances. Further, even if the right were applicable, the Judge held that the reforms constituted a reasonable limit on the right under s 5 of the Bill of Rights noting that “the provision of subsidised rental housing is no longer regarded as being as important in the public interest as was formerly the case.” Finally, the judge also dismissed Mrs Lawson’s allegation that the Ministers had not given proper regard to available alternatives, and to relevant international obligations – holding that it was not for the court to judge whether the government of New Zealand has fully complied with those obligations.

In 2013, it may seem that the Lawsons case belongs to a distant past, given that the market rents policy no longer exists. In fact, as this year’s events have shown, the extent of the state’s responsibility for providing adequate, affordable housing remains a pressing social and political concern, 17 years after the court declared it had no legal means to give the economic and social rights of the vulnerable very much weight.

Putting such mechanisms into the Bill iof Rights and into the hands of judges would not mean every individual would get their particular grievances heard ans satisfied. Opie, at the conclusion of his article, makes that point very clearly : generally speaking, he says, the judge in the Lawsons case was correct in stating that a court should be reluctant to intervene in areas with high policy content. That shouldn’t be the end of it, though :

Where there is evidence of considerable prejudice to people and indications that their rights (whether at international or domestic law) are being breached by a certain policy, a substantive judicial review of the justifications for and proportionality of that prejudice, and of the measures taken to ameliorate it, should be available.

Such a review will not necessarily lead to a finding that a particular measure is impermissible, and indeed a finding in favour of the measure will strengthen its legitimacy. In the case of the housing reforms, given their severe consequences for many state tenants, the ability to invoke a rights-based, substantive judicial review would have been entirely appropriate (whatever the outcome of such a review). It would also have been consistent with New Zealand’s international obligation to protect the right to adequate housing.