Ever wondered why the bars in West Auckland are so lame? Or why you can’t buy alcohol at the supermarket? It’s because of a monopoly called The Trusts, and Sam Learmonth says it’s time to talk about why it exists.
Unless you live in Invercargill or West Auckland, you’ve probably never given a second thought about popping into your local supermarket or bottle store and picking up a mid-priced pinot gris to enjoy with dinner.
So spare a thought for those of us who have the misfortune of living in a liquor licensing trust area. Almost any alcoholic beverage you purchase or consume in West Auckland establishments are linked back to The Trusts.
In West Auckland, The Trusts, (or more specifically The Portage and Waitakere Licensing Trusts) have an exclusive license to operate hotels, taverns and off-licences in a geographical area that covers almost all of West Auckland: including Avondale, New Lynn, Glen Eden, Titirangi, Glendene, Piha, Henderson, and up to Kumeu – meaning there are no bars, bottle stores, and almost no restaurants not owned or operated by The Trusts.
A recent night out in Avondale illustrates the issue affecting West Aucklanders. One of the venues for the International Film Festival was the fabulous Hollywood Cinema. Many people enjoy going to the movies and enjoy having a drink before or after the movie, but unfortunately for Avondale and its visitors, the sole bar The Taphouse is a Trust-run facility that leaves a lot to be desired. (The cinema itself is licensed, but the Taphouse is the only dedicated bar).
Avondale has some of the most spectacular views in Auckland towards the Waitakere Ranges, but The Taphouse overlooks a car park. Whilst alcohol was (temporarily) available during the film festival, the bar was completely unable to cope with patrons simply wanting to purchase drinks and concessions.
With the recent announcement that Panuku (Auckland Council’s development arm) has identified Avondale as one of its new urban regeneration areas, it would be nice to think that a wine bar or decent pub could open – and not have to face the hurdle of dealing with The Trusts as well as the general burdens of operating a business.
Large apartment complexes are being built (or scheduled to be built) in Avondale, including Set by Ockham, and another is planned by Mansons. Both companies are known for delivering high quality residential developments, bringing in a much-needed population boost to the local area and the associated spending that comes with it.
Similarly, the government’s announcement up to 4000 homes will be built on the Unitec site means there will be a significantly larger group of people in the area, many of whom will be looking for a variety of cafes, restaurants, and bars in which to socialise. Based on The Trusts’ efforts to date, is this something we really want to leave in their hands?
The primary justification of the licensing trust model is that The Trusts invest profits back into the local community by way of grants to sports clubs and other community groups. This is reflected in The Trusts’ own marketing material which proudly displays the phrase “Giving Back”.
Much has been made of The Trusts’ generosity (mostly by The Trusts themselves), which constantly reminds West Aucklanders that were it not for their funding, these clubs would be penniless, going cap in hand to local businesses in order to buy a single hockey stick or recorder.
The Trusts conveniently overlook the fact that community groups all over the country receive a lot of funding from businesses, small and large, and have done so for some time. More importantly, The Trusts actively mislead people into thinking that their support of community groups comes from the sale of alcohol. While The Trusts no doubt give back to community groups, it’s important to recognise this money comes primarily from gambling revenue, and it’s legally obligated to return it to the community.
There is a murky relationship between the revenue generated from gambling (a significant amount of which is problem gambling) and licensing trusts that are often the very willing venues of pokie machines. Step into any Trusts-run venue and the clanging ring of pokie machines usually hits you (right after the smell of stale alcohol and seasoned wedges).
The Auditor-General has already identified serious issues around the governance and management of licensing trusts. Although licensing trusts operate significant commercial enterprises and fall under the jurisdiction of the Auditor-General, they are one of the least known parts of the public sector. As former Auditor-General Lyn Provost pointed out in 2014, “licensing trusts have little or no visibility in Parliament. They hold assets on behalf of their communities, and it is important that they are accountable to their communities”.
She raised the point that licensing trusts are not subject to any serious public scrutiny (could anyone name a single licensing trust trustee or know how to challenge their decisions?). Aside from the Auditor-General’s limited powers, licensing trusts appear to be run as little more than personal fiefdoms.
Up until recently, The Trusts’ financial contribution to the local community could be measured in tens of thousands of dollars. Their low point seems to be in the 2011 financial year, when The Trusts returned $38,000 to local schools, community facilities, and arts programmes. To put that in some context, the Trusts had sold $100m worth of alcohol in the preceding decade. That’s what Giving Back looks like.
Things improved markedly in later years – for example in 2016, The Trusts claim to have given back $1m of its $8.8m profits on alcohol sales for the year ending 31 March 2016. For that financial year, The Trusts had combined retained earnings of $48m. But at least it rose – $1m was a 900% increase on 2011 when The Trusts generously donated $100,000 to community groups.
Quite probably as a result of the public outcry regarding their paltry community support, The Trusts upped the ante and have made more funding available to community groups through the recent Million Dollar Mission. However, the campaign also had a marketing budget of $200,000. These figures alone should be ringing alarm bells with community leaders and the community at large.
Any criticism of The Trusts is usually met by howls of protests from people who allege The Trusts have saved West Auckland from turning into some modern day Sodom and Gomorrah. A commonly raised concern is that alcohol will be sold in dairies if we join the rest of the world and ditch the licensing trusts. This argument is a complete fallacy. Substantive reforms to liquor licensing laws in 2012 means dairies can no longer sell alcohol, and you’ll have to go to a supermarket or a bottle store like everyone else to get that bottle of wine or six pack of beer.
Similarly, The Trusts’ argument that West Auckland has more responsible consumption of alcohol because of its existence has been met with a rather lukewarm response from ALAC and the New Zealand Police (and in 2016, The Hangar Bar was dubbed the worst bar in Auckland for the number of arrests linked to it).
My main issue with The Trusts, and it is shared by many, is the total lack of transparency in how they operate. The Trusts have said in the past six years it has not objected to a single alcohol licence and, as a result, West Auckland is lucky enough to have a shopping centre where you can buy alcohol (LynnMall). But if Glengarry wanted to open a store in Avondale or New Lynn, would The Trusts suddenly wake from their slumber and crush the application or would they welcome the competition? I highly doubt they’d welcome it.
The Trusts have recently announced that rather than squirrelling money away into a not-insubstantial property portfolio, they will spend some of the revenue they take from West Aucklanders on new bars and restaurants. To me, this rather misses the point; surely the changing landscape of hospitality in Auckland should mean anyone should be able to operate a bar or restaurant if they meet the licensing criteria?
The Trusts have unveiled some new venues with much fanfare and supposedly to meet West Auckland’s changing hospitality demands. But I’d love to hear about a Trust-run bar or restaurant that has been voted one of Auckland’s top bars or restaurants (or even nominated). I’ll save you the bother, there isn’t one. This sums up perfectly why a monopoly should not be running bars and restaurants – they simply do not have the skill set to do it. The private sector can readily cater to changing tastes and can adapt relatively quickly if they need to, and The Trusts do not have that flexibility because of their large size and unwieldy governance.
It is also hard to make a restaurant appealing when it’s full of pokie machines. Instead, The Trusts’ outfits remain unloved behemoths, increasingly isolated from a community that has no choice but to take what’s on offer. It’s a level of paternalism that is hardly justified in modern day hospitality.
West Aucklanders spend a lot of money on entertainment. They deserve transparency and honesty from the Trusts. They also deserve political leadership that recognises the enormous conflict of interest in elected local government members also sitting as elected trustees of these monopolies.
Various elected members, including councillors and local board members (right across the political spectrum), also sit as elected trustees of either the Portage Licensing Trust or the Waitakere Licensing Trust. What is good for The Trusts may not be good for the long-term benefit of the community. The suburb I call home, Avondale, is a great example.
It is time the Trusts stepped up and started being more transparent. It is time our local politicians were politicians, and it’s time a publicly-funded monopoly stopped running bars and liquor stores.
At the very least it’s time to sit down and have a chat over a glass of wine.
The Spinoff’s business content is brought to you by our friends at Kiwibank. Kiwibank backs small to medium businesses, social enterprises and Kiwis who innovate to make good things happen.