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Sale of Liquor Amendment Bill
What the Bill proposes (C.22 new Part 1A, 28(a-j))
A new section in the Act allowing:
  • a ‘dispensation’ for some from having to hold a licence
  • dispensations to be granted by the local District Licensing Agency
  • reports, public notification and local hearings on objections
  • public hearing with lawyers if the DLA wishes to revoke or change a dispensation
  • no national Authority involvement or control over dispensation decisions
  • Review committee recommended widespread dispensations, including clubs

Alcohol & Public Health Research Unit strongly opposes dispensations because they will:

  • ‘give away’ the power to regulate
  • undermine the fee base that resources the licensing system
  • reduce routine monitoring
  • increase costs and formalities at local government level
  • increase risk of ‘influence’ by local business interests
  • run counter to research and theories on effective regulation

Basically a dispensation is a cheap licence that won’t be monitored unless there’s complaints. Such a system will undermine the ‘responsible system of control’ that is the Object of the Act, and also the fee structure that resources the licensing system.

Such a proposal runs counter to theories on how to design effective - and cost-effective - regulatory systems. For responsible licensees, too, a ‘level playing field’ is worth a three yearly licence renewal fee.

Dispensations for who?
The Bill does not propose that dispensations be available to off licences or licensees whose principal business is the sale of liquor. That is, they would be available to the non-specialist sellers of alcohol.
  • clubs (purpose of business sports, social), who will probably now be selling to the public
  • all licensed cafes and restaurants (food)
  • nightclubs (principal purpose is ‘entertainment’ - see note on the Drinking age)
  • all conveyances (transport, tourism etc)
  • TABS (many of whom are applying for ‘supervised’ on-licences) and other ‘supervised’ or undesignated on-licensed premises.

These premises should ‘not detract from object of act’, provide an ‘effectively supervised and managed safe drinking environment’ and the applicant will be judge on ‘reputation, experience and qualifications’, and whether they hold a manager’s certificate.

Those with ‘tavern’ type on-licences, who may feel they also meet these criteria, are likely to think this is a very uneven playing field indeed.

Dispenses with what?
The clauses on dispensations are so much like the sections of the Act on on-licences that it may be quite hard to spot the point of the exercise - and its implications.
What is dispensed with is the requirement for renewal after 12 months or 3 years. A dispensation is either for an indefinite period or until some stated future date. That is, it is a dispensation from paying a fee.

All the enforcement provisions apply as if it were a licence (C.28J), but in most areas rounds of routine inspection are lined to renewal dates, unless some matter ‘comes to the attention’ of enforcement officers (Hill & Stewart 1997). This means that, in practice, it would be a dispensation from being monitored, since at present most routine monitoring is linked to the cycles of licence renewal. Instead, the community would be relied on to bring any matters to the attention of the DLA or police.

Reduced monitoring also means reduced opportunities for observation, advice on host responsibility matters, law etc. - that is the valuable consultative, educative role that inspectors often play in interactions with licensees. Reduced resourcing will mean less time to support liquor liaison forums and a ‘partnership’ approach to issues and events.

‘Easy to get, difficult to lose’
The Liquor Review Committee 1996 envisaged that dispensations to clubs and other on-licensed premises would be widespread.

A dispensation would be difficult to refuse. Although the criteria outlined for new 28G(2) include the object of the Act (which licence criteria do not), they are very similar to the sections about granting a licence is made - and the Liquor Licensing Authority find itself unable to refuse a licence, except on grounds of ‘unsuitability’ such as a police record (LLA 1996, 1997, Hill & Stewart 1998, Hill 1998).

But it is not the Authority that grants dispensations it is the local District Licensing Agency, under all the pressures of business interests and Council politics in local communities. There is no provision for quality control or overview from the national Authority, who is simply required to add dispensations to the categories in its register licences and manager’s certificates.

Like licences, applications for dispensation will be publicly notified, police and Medical Officer of Health will investigate but only report if they oppose the application, and members of the public can also object. But whereas objections lead to applications being referred to the national Authority, objections to dispensations would lead a public hearing by the local DLA. That is, any adverse report by a DLA inspector on an application for a dispensation made by a DLA inspector would involve the DLA in the expense of a public hearing.

So too would any attempt to ‘cancel, suspend or vary’ a dispensation. A new S.28L(5) specifically mentions the right to of the holder to ‘appear and be hear at a hearing, whether personally or by counsel, and to call, examine and cross-examine witnesses’. Such a hearing is likely to be formal, expensive, as well as ‘nerve-racking’ and ‘bamboozling’ for objectors (as some have found hearings before the Liquor Licensing Authority, Hill 1998)

Recipe for regulatory ‘capture’
The above points indicate that dispensations given out by Local District Licensing Agencies (that is, committees of Council) is likely to be a recipe for cooption in local licensing decision makers.
This is just the situation identified and warned against by submissions to the Laking Review (1986) that preceded the 1989 Act, and by local statutory officers asked to give their views on full devolution of licensing decisions to local government level (Hill & Stewart 1996, 1997). It was felt that in small face-to-face communities, regulatory decisions were likely to be influence by local business and political interests.

A great deal of research and theorising on systems of regulation focuses on the dangers of regulatory ‘cooption and corruption’ (eg Ayres & Braithwaite 1992).

The current two tier system with licensing decisions shared between local and national levels - between local information gathering and reporting and a national overview independent of local pressures - is a practical mechanism to avoid such a system. (See also ‘accreditation’ on this point’.)

Runs counter to theories of effective regulation
The sale of liquor in New Zealand is regulation through the licensing system, and the power to regulate and to require certain standards of management hinges on the granting or cancellation of the individual licence. It is not logical to give that power away in the form of a dispensation.
Nor is it logical to undermine the resource base of the licensing system by dropping the fee for just that section of the licensed hospitality industry that is fastest growing. DLAs have reported that fee-based resources already mean limited routine monitoring and limited ability to engage in proactive initiatives. In its submission the Liquor Review 1996, APHRU recommended a shift to an annual operating fee, rather than the present application fee.

Dispensations for some also undermine the ‘level playing field’ among the different types of on-licensed premises. It can be expected that dispensations will be hugely popular among those eligible; there is no reason why one would not apply, and little reason why the majority of applicants would be refused. But the lower costs for some will put greater competitive pressure on those premises not eligible, ie those whose principle purpose of business is dispensing alcohol.

In a rational ‘user pays’ system it needs to be recognised that well-managed premises may not themselves contribute to high regulatory costs, but they have a direct interest in regulatory agencies enforcing the law among licensees who seek profitability through poor practices (serving minors, already intoxicated patrons, promotions that encourage excessive drinking etc.), under cutting their own good management practices. The ‘level playing field’ is well worth a three yearly fee.

The reduced monitoring that is likely to result from this system of licence dispensations is also counter theoretical. Theorists of regulation and deregulation stress the important of regular monitoring of the business activities of small firms (Grabosky 1995; Ayres & Braithwaite 1992; Sigler & Murphy 1991). Self-regulation is acknowledged to work only in industries with a few large players (Kinleith and larger); rules are most likely, for a variety of reasons, to be broken by small firms. These conclusions are drawn from firms, industries and countries much larger than New Zealand, in which the average firm - and the vast majority of licensed business - has less than ten employees. For effective regulation of business activities, theorists recommend not only that small firms be monitored regularly but that all firms get the occasional surprise visit.

Peak hours in licensed hospitality are late evening hours, with problems and non-compliance most likely towards closing time. Officers have reported that limited resources mean licensed premises receive late night visits only very occasionally, and in some areas not at all (Hill & Stewart 1996). Reducing the resource base through fee dispensations is likely to worsen this situation.

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