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'Responsive Regulation' & the Sale of Liquor
Recommended Amendments to the Sale of Liquor Act
The following clauses to the Sale of Liquor Act contain amendments (in bold type) which are the outcome of this project. They reflect the application of Ayres and Braithwaite’s ‘responsive regulation’ to liquor licensing in New Zealand and the support given to these particular changes by 12 informants expert on different areas of liquor licensing in feedback interviews on an earlier (and wider) set of suggested amendments. Changes to current wording are highlighted in bold type.
13. Criteria for on-licences---*
(1) In granting or refusing an application for an on-licence, the Licensing Authority shall have regard to the following matters:
The suitability of the applicant:
The days on which and the hours during which the applicant proposes to sell liquor:
The areas of the premises or conveyance, if any, that the applicant proposes should be designated as restricted areas or supervised areas:
The Host Responsibility policy proposed by the applicant in relation to :
(i) the requirements of this Act in relation to the sale of liquor to prohibited persons,
(ii) other matters related to the responsible management of the premises.
The applicant's proposals relating to the sale and supply of non-alcoholic refreshments and food:
Whether the applicant is engaged, or proposes to engage, in---
The sale or supply of any other goods besides liquor and food; or
The provision of any services other than those directly related to the sale or supply of liquor and food,-and, if so, the nature of those goods or services:
Any matters raised in any report made under section 11 of this Act.
Any matter raised under section 10 or section 106 of this Act.
The site of the premises in relation to neighbouring land use.
(2) The Licensing Authority shall not take into account any prejudicial effect that the grant of the licence may have on the business conducted pursuant to any other licence.
(3) In considering any application or renewal, the Licensing Authority may have regard to any policy adopted by the Local Authority in regard to licensed premises.
Conditions of on-licences---*
It shall be a condition of every on-licence that the licensee has available for consumption on the premises or conveyance a reasonable range of non-alcoholic refreshments.
(2) It is a condition of every on-licence granted in respect of a hotel or tavern that no liquor is to be sold or supplied to any person (other than a person to whom section 7 (1) (a) or (b) applies) on---
``(a) A Sunday after 3 a.m.; or
``(b) Good Friday; or
``(c) Christmas Day.''
(3) Nothing in subsection (2) of this section shall affect the sale or supply of liquor pursuant to and in accordance with any special licence granted in respect of the hotel or tavern.
(4) On granting an application for an on-licence in respect of a hotel or a tavern, the Licensing Authority shall designate each bar on the premises as a restricted area or a supervised area.
(5) On granting an application for an on-licence, the Licensing Authority may impose conditions relating to the following matters:
(a) The days on which and the hours during which liquor may be sold:
(b) The provision of food for consumption on the premises or conveyance:
(c) The designation of the whole or any part or parts of the premises or conveyance as a restricted area or a supervised area:
The steps to be taken by the licensee to ensure that the provisions of this Act relating to the sale of liquor to prohibited persons are observed,
Other policies of the licensee for the responsible management of the premises.
The site of the premises in relation to neighbouring land use.
Any matter arising from a report or public objection.
Different conditions may be imposed under subsection (5) (a) of this section in respect of different parts of the premises or conveyance, or in respect of the different classes of persons described in section 7 of this Act.
(7) In determining the conditions of the on-licence in respect of any premises, the Licensing Authority may have regard to any policy adopted by the Local Authority in regard to licensed premises
(8) The steps and policies of the licensee submitted under (5)(d) and (e) above as approved by the Licensing Authority shall be attached as a condition of the licence.
* Similar changes would be included in relation to off-licences, club licences and special licences as appropriate.
10: Objections DELETE (4) *
10(4) In any case where---
(a) The application relates to any premises or conveyance in respect of which an on-licence is presently in force; and
(b) The applicant seeks the same conditions as those presently applying to that licence, an objection may be made only in relation to the suitability of the applicant.
S.__. Powers of Sanction
The Liquor Licensing Authority may take one or more of the following actions:
Impose, vary or revoke a condition of the licence, or otherwise direct the licensee,
Limit the period for which the licence is renewed,
Suspend the licence for any period from one day to 12 months,
Suspend or withdraw the manager's certificate,
Cancel the licence,
Disqualify the licensee for up to 3 years,
Take no action.
[132(7) might then more appropriately be included in this new section.]

Licence criteria and conditions in the Bill

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'Responsive Regulation' and the Sale of Liquor:
A theoretical approach
In this project it is intended to examine New Zealand issues around liquor licensing and the reduction of alcohol related harm in the light of recent international developments in regulation theory. Ayres and Braithwaite (1992) advocate an approach to designing regulatory legislation and practices which they term 'responsive regulation'. They note that market liberalisation and privatisation has frequently been associated with increased regulation, since governments remain accountable to ensure expected standards of fair trading, equitable access and both public and environmental health and safety. In their view, however, the most effective regulation provides a framework which facilitates a high proportion of willing compliance in response to persuasion, supported by high expectations of appropriate but inevitable enforcement. This may be delivered by means of an 'enforcement pyramid' offering a range of sanctions of increasing severity from which to select a response appropriate to the degree of infringement.
Under this model, a 'climate of compliance' is encouraged by assuming the cooperation of the majority as 'good citizens' while demonstrating the ability to deal effectively with infringements. The involvement of community and public interest groups is viewed positively by Ayres and Braithwaite, who recommend empowering such groups and institutionalising their role in regulation. They explore forms of 'tripartism' in which information sharing with special interest groups enhances their 'watchdog' role to supplement the work of regulatory agencies. The Surfers Paradise Safety Action Project is an example of such an approach (Homel et al. 1994; McIlwain 1996). In New Zealand too, crime prevention strategists have noted the importance to success of involving communities and their networks (Crime Prevention 1993; Dept NZ Police 1992). This is supported by the Alcohol & Public Health Research Unit's own research based experience.
Ayres and Braithwaite's model of 'responsive regulation' and the component strategies they discuss are based on analyses of regulation in areas of concern to public health, such as occupational health and safety, nursing homes, the environment and product safety, as well as financial markets and institutions. Their work builds on previous research undertaken in collaboration with the Australian Institute of Criminology on the enforcement strategies of agencies charged with regulating business practices in a range of areas (Grabosky & Braithwaite 1986), and is contributing to the further development of regulatory thinking in Australia (Grabosky & Braithwaite 1993). The strategies of 'responsive regulation' appear to have particular potential in addressing the tension between coercion and persuasion, between accountability and devolution, and between public health strategies of enforcement through legislation and of education for attitude change.
In describing inspection work in nursing homes, for example, they note how a persuasive and cooperative approach in routine regulatory encounters was more likely to result in information about infringements by concerned staff than an adversarial approach, more appropriate to 'higher' levels of the enforcement pyramid. They draw on research in the pharmaceutical industry to suggest that many minor infringements do greater harm than grossly illegal acts, but that firms rationally assess the costs of compliance against the chances, speed, severity of enforcement and the costs of compliance. In both these example situations, regulatory practices which are felt to be offensive or inappropriate (too severe or not severe enough) are like to engender a culture of resistance. One strategy suggested is for regulation which allows the flexibility for inspectors and those regulated to negotiate an acceptable solution or agreement, which then becomes formalised and enforceable. An example is provided by Grabosky and Braithwaite (1986) in contrasting effective mining safety enforcement practices with other industrial health and safety regulation. As well as sanctions aimed at individuals responsible, rather than companies, and informal justice by 'third party ' safety committees or unions, they described inspectors, as much technical advisers as watchdogs, getting managers to write their own rules. Ayres & Braithwaite referred to this as 'enforced self-regulation', in which publicity and corporate concerns about identity and public image may be as effective as legal coercion. They support an increased role for community and special interest organisations in information gathering and public accountability which will strengthen the acceptability of deregulatory trends in legislation.
Possible application in New Zealand
Aspects of Ayres & Braithwaite's analysis resonate with local strategies to encourage best practices on licensed premises in New Zealand. The Alcohol & Public Health Research Unit's research on the administration and enforcement of the Sale of Liquor Act (Stewart et al. 1993; Hill & Stewart 1996) suggest that a 'climate of compliance' could and has been created in some localities in which statutory officers were liaising closely. Some licensing inspectors, police and public health officers, collaborating through licensing liaison committees, reported satisfaction in being able to negotiate solutions and compliance with licensees without the need for prosecution or referral to the national Licensing Authority. Such groups were using initiatives such as surveys identifying where intoxicated drivers or other offenders had last drunk, and media campaigns on local issues to bring informal pressure to bear on licensees to improve the host responsibility practices of licensees.
In some localities researched, health promotion officers carrying out hands-on Medical Officer of Health responsibilities under the Act, were educating licensees and their staff on host responsibility practices. Some were encouraging licensees to write their own in-house policy on host responsibility (c.f. the mine safety rules mentioned earlier). Yet this innovative work was entirely informal. Not only was such a requirement and the policy itself unenforceable, but the Act did not provide for formal delegated authority to do this valuable work. The New Zealand Act is innovative in requiring the provision of food and non-alcohol beverages and in giving the right of reporting on most applications to Medical Officers of Health. However, a conclusion of The Sale of Liquor Act, 1989: Local Perspectives research (Hill & Stewart 1996) was that the aim of the Act to contribute to the reduction of alcohol related harm was insufficiently operationalised, in not providing sufficient structures and tools in the legislation to underpin public health work on licensed premises.
Some of the Act's provisions directed at reducing alcohol related harm are clearly in need of amendment. Particular concern was expressed in an Alcohol Advisory Council (1995) survey of stakeholders at aspects of the Act relating to the sale and supply of liquor to minors and to intoxicated persons. Police and licensing inspectors reported that these provisions were confusing, making them difficult to enforce and open to manipulation by some licensees and minors (Hill & Stewart 1996). Some of these difficulties may be partially resolved by amendment. Solutions to the complexities of the current age in terms of enforcement have been suggested as having one age with no exemptions, and the introduction of a national identification card system (ALAC 1995; Hill & Stewart, 1996). While this may reduce illegal access by underage drinker, several studies of the situation in similar cultures to New Zealand, have reported poor enforcement of the age by police and circumvention of it by both servers and minors (Wolfson et al, 1996; Wagenaar et al, 1993; Forster et al, 1994; Wagenaar & Wolfson, 1994; Preusser & Williams, 1992). This suggests closer attention needs to be paid to identifying how this can be improved. Research into the response to host responsibility campaigns suggests a range of reasons influence whether licensees will adopt the concept, which embodies a notion of responsibility and self regulation. Licensing inspectors thought influences on licensees to adopt host responsibility included the promotional work of licensing inspectors and community health workers, but that financial concerns on the part of the licensee and pressure to sell alcohol in a very competitive environment were amongst factors which prevented its adoption. Managers of premises perceived factors which had motivated them to make changes in accordance with host responsibility included legal requirements imposed by the local council in order to obtain or renew a licence; increased competition due to increases in premises, encouragement from local community health workers and a feeling of social obligation (Abel et al, 1993).
The experiences and practices reported by statutory officers working under the Act revealed that many of their most innovative and often effective strategies went beyond the enforceable provisions of Act. As well as work on host responsibility, which went well beyond what officers could legally require of licensees, they gave examples of specific problems - such as noise or risk of injury - which they felt could have been resolved, had the law not narrowly limited the conditions which could be attached to a licence and enforced by law. Looked at from a 'responsive regulation' perspective it might be said that the Act as currently written is insufficiently flexible to back up the kind of negotiated approach which statutory officers are finding most successful in meeting the objects of the Act.
In countries comparable to New Zealand, as shown by research currently being undertaken by the Alcohol & Public Health Research Unit, licensing legislation frequently provides a range of options, and greater discretionary powers than does New Zealand's current Sale of Liquor Act (Hill & Stewart, in progress). The legislation so far viewed also allows greater consideration to be given to, for example, 'the undue offence, annoyance, disturbance or inconvenience' to others in the vicinity' of the licensed premises (Liquor Act 1992, Queensland). This is done by the inclusion of such phrases in the criteria for granting or objecting to licences, or by wider criteria regarding those who may object - including 'any person whom the justices consider have a right to object' (Licensing Act 1964, Britain).
Comments by the Liquor Licensing Authority suggest that some of their decisions may have been constrained by rigidities in the Act with regard to criteria. The two main sanctions under the Act are prosecution in the local district court under the penal provisions of the Act, and the suspension, cancellation or non-renewal of the licence by the Liquor Licensing Authority. The power of the Authority to remove licences had been a key argument in the liberalisation of liquor licensing. However, bringing a case to court or to a Liquor Licensing Authority hearing for suspension or cancellation, particularly given the resources required, was reported as a disheartening experience. In earlier research statutory officers reported that some district court judges imposed minimal fines for licensing infringements and that liquor licences were by no means 'easy to get, easy to lose' (Hill & Stewart, 1996).
A further disincentive was the ability of the licensee to continuing trading during appeals to the High Court, although this has recently been changed so that premises remain closed. The central power of the Liquor Licensing Authority was not being demonstrated. In response to these experiences, two areas of discretion in regard to licence conditions - hours of trading and the licence period - were being used as sanctions, with reduction in hours being sought and a shorter renewal period being used. This suggests the possible applicability in New Zealand of Ayres & Braithwaite's point that a sanction is more likely to be applied where enforcers can select from a range of sanctions of varying severity.
Community input into licensing decisions in New Zealand is at present under-researched. Stakeholders in a number of localities reported that the participation of individuals and community groups concerned about licensing decisions was limited by criteria and notification procedures in the Act. Community control has therefore been exercised through other strategies, such as obtaining Council policies on licensing hours or making the sale of alcohol a conditional land use under the Council's District Plan (Hill & Stewart 1996). Possible changes to this situation will be considered in the light of Ayres and Braithwaite's discussion of tripartism. Their advocacy of empowering public interest groups may have application with regard to Maori wardens. Maori wardens have some statutory powers under the Maori Welfare Act 1962 in controlling drinking by Maori in licensed premises.
These theoretical, empirical and comparative threads, taken together, indicate the potential for an investigation of the applicability of 'responsive regulation' and other theoretical work to be considered in the New Zealand situation. Past documentation of the regulation of the sale of liquor through licensed premises, and the in-depth study of relevant situations and practices proposed here, provide a context in which the positive and negative aspects of such a model can be explored. The research will consider the application of theoretical perspectives on regulation to assess how it may be able to improve efforts to reduce alcohol related harm arising from licences premises.