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Sale of Liquor Amendment Bill


22. Dispensation from holding on-licence. [New Part I A - SOL 28A)

Totally opposed. Dispensations fly in the face of research and theory on effective regulation. The licensing system hinges on the power to grant, refuse or cancel a licence. A dispensation gives away that power. The Review recommendation for widespread dispensations from the need to hold a licence is would undermine the licence system, in particular its resource base. See further notes.

The clauses related to dispensations and the power to grant dispensations read so much like the sections and processes for granting a licence - in fact criteria go further to include the object of the Act - that it may at first be difficult to see what is being dispensed with. Essentially it is a dispensation from paying the fee. The dispensation would apply until a stated date or indefinitely, whereas a licence must be renewed after 12 months in the first instance, then usually after 3 years and an application fee is paid at this time.

At present inspection by most DLAs is focused at the time of renewal and police respond to ‘problem premises’ which come to their attention. There is little routine monitoring of all premises, although well organised districts do organise the surprise visits that regulatory theorists recommend, particular in regulating small businesses (ie nearly all NZ ones). Although the clauses assure rights of entry, inspection etc, a dispensation would in practice be a dispensation from being monitored.

Dispensations and the ‘level playing field’
It is important to think about dispensations and the ‘level playing field’ in relation to the fact that clubs are to become on-licences, faced with high fees and management costs but able to sell to the public and apply for an off-licence. See notes on clubs.
Regulatory ‘capture’ by local business interests
An additional problem is that the dispensations would be granted by local DLAs, not the LLA. In both 1986 and 1995 those working at the local level of liquor licensing expressed concern that discretionary decision making power devolved to local level would lead to local ‘political’ influences (Laking 1986; Hill & Stewart 1997). There is a large body of literature focused on how to design regulatory systems that avert ‘capture, cooption and corruption’ in face to face regulatory relationships, particularly in small towns. The present two-tier local and national structure is one solution to this that further devolution may well undermine.

In fact the dispensation appears to allow more discretion to DLAs than to the LLA in granting actual licences, in ‘softer’ criteria (SOL new 28G) including the object of the Act, and apparent flexibility on conditions, suggested in the clause on variation of conditions (SOL new 28I) - there is no actual clause on dispensation conditions themselves.
Public hearing to revoke a dispensation - 28I(5) absolutely opposed.
Any type of licensed premises may apply for a dispensation and like the LLA, the DLA cannot refuse without specific grounds. Although the local DLA is to grant the privilege of a dispensation for good behaviour and monitor that good behaviour continues, any attempt to withdraw that privilege is to go to a formal public hearing involving representation by counsel and the calling, examination and cross examination of witnesses. These hearings would be an expense of the DLA, not the LLA. They would involve such time and expense to local Councils that regulatory managers may be unwilling for inspectors to withdraw dispensations. At present it is the large cities with the expertise and revenue bases from large local hospitality sectors that have borne the burden of taking the relative few cases that have successfully withdrawn licences.

APHRU strongly opposes dispensations. On the contrary, it continues to recommend, on the basis of research on the operation of the Act, that the regulatory resource base of both DLAs and LLA would be better secured by an annual operating fee. DLAs have reported that they are currently limited in both monitoring and proactive activities by currently operating at the limit of or under the level of the DLA share of fee revenue (Hill & Stewart 1996).

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