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BusinessSeptember 19, 2018

The case for abolishing West Auckland’s alcohol monopoly

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The West Auckland Licensing Trusts Action Group (WALTAG) needs 28,000 signatures to force a vote over The Trusts’ monopoly on the sale of alcohol in its region. WALTAG member Nick Smale makes the case for change, arguing that West Auckland suffers from the consequences of a blunt, out-dated approach to alcohol control. 

Read more: The case against abolishing West Auckland’s alcohol monopoly

West Auckland is home to two of the four remaining licensing trusts in New Zealand that still hold monopoly rights over certain alcohol licenses (Invercargill and Mataura being the other two). The Portage and Waitakere licensing trusts (collectively known as The Trusts) operate 26 bottle stores under their West Liquor and Village Wine & Spirits banners, ten bars/restaurants, and also Henderson’s Quality Hotel. In 2017-2018, their revenues totalled $114 million and their after-tax profit was $4.5 million. The net value of The Trusts’ assets is estimated to be over $100 million.

Right now there’s a debate happening in West Auckland about whether the licensing trusts should keep their monopoly. I’m part of a community group that’s collecting signatures on a petition to force a referendum in 2019. So what’s our beef?

Where are all the bars?

It’s not easy to find a place to get a drink out west and that’s mainly due to The Trusts’ monopoly. Only The Trusts can operate a drinks-led venue (a bar or pub) in West Auckland and they have just ten of these across the district. To put that in perspective, that’s just ten bars for approximately 280,000 people – more than twice the population of Dunedin. Suburbs like Glen Eden and Blockhouse Bay have none at all, some suburbs have one, and New Lynn and Henderson are the lucky ones with two! Sure, you can get a drink at a restaurant, but restaurants are about eating meals, not shooting the breeze with your mates over a lazy beer or enjoying a much-deserved wine with friends.

Restaurants out west can’t stay open late and put the footy on the big screen, and they can’t pack up the tables after dinner and put on a DJ or some live music. A local running group recently asked a restaurant if they could stop in at 8.30pm for a beer. The answer was no: they’d love to be able to offer them a beer, but their chef knocks off at 8pm and they can’t serve alcohol unless they’re serving meals.

Choice and convenience

Supermarkets in West Auckland can’t sell beer or wine. That means an extra stop at the bottle store to stock up the beer fridge or pick up a bottle of wine. Bottle stores are either branded ‘West Liquor’ or ‘Village Wine & Spirits’ and we’re stuck with the range of products they choose to offer. If they don’t stock your favourite tipple or you’d just like to explore the range in a specialist store, then you’re forced to drive out of the district or go online to get it delivered.

Stifling our suburbs

West Auckland’s evening economy is suppressed by the constraints of the monopoly. The lack of choice and The Trusts’ poor hospitality offering is driving business away from West Auckland as residents choose to spend their money elsewhere. Less local spend means less local investment, fewer local jobs, more $2 shops and more ‘for lease’ signs in our town centres.

And West Auckland certainly has a few town centres in need of a facelift. Avondale, Glen Eden and Henderson have great potential, and with the current rate of population growth, there are opportunities right now for risk-tolerant operators to open new venues. Removing the monopoly certainly isn’t a silver bullet that will transform these suburbs overnight, but private investment in local bars would contribute to having more vibrant and successful suburban town centres.

A broken democracy

Licensing Trusts are accountable to their communities through three-yearly elections, but this democracy is not functioning effectively. In the 2016 elections, turnout was just 27% and skewed toward an older, conservative demographic. Voters discontent with the status quo found no candidates standing to represent them. In the lead-up to the election there was very little meaningful engagement between candidates and voters, and certainly no public debate of any issues or decisions the licensing trusts are facing. As a result, the current elected members don’t reflect the diverse demographics or the opinions of their communities.

Effective democracy relies on a well-informed public, but national media outlets have shown little interest and the local newspaper (Western Leader) is only lightly resourced. Media coverage of The Trusts’ activities is minimal and there’s a lack of meaningful scrutiny.

I’ve found it very difficult to get information about The Trusts, partly because they run their operations in a joint venture company. This arrangement keeps their financial statements hidden from public view and also enables The Trusts to dodge some of the official information requirements that normally apply to licensing trusts. Reasonable requests for information have been met with what would charitably be described as “opaque” responses. I’m incredulous that requests for such information had to be escalated to the Ombudsman and that our elected representatives have endorsed the organisation’s evasion of reasonable public scrutiny.

Show us the money!

Perhaps as a consequence of the lack of scrutiny, The Trusts have quietly embarked on a journey they call their “Future Benefaction Strategy”, which will enable “Giving Back More Forever”. They’ve stated their aim is to build a $200 million investment base by 2030 to enable a sustainable annual community return of $5 million. The strategy has only recently been discussed publicly, though the stockpiling of funds to build the investment base has been ongoing for about five years.

The public benefit in withholding $200 million over 17 years to enable greater returns in the distant future isn’t exactly clear, but it does make it abundantly clear where The Trusts’ profits are coming from. The Trusts’ alcohol business barely covers their overheads and it’s their investments (in property and managed funds) that actually deliver the goods.

Removing the monopoly isn’t killing a golden goose, it’s more like putting a lame duck out of its misery. The community would receive more funding if The Trusts stepped away from retail and hospitality and instead focussed on investing prudently and distributing the returns.

But what about all the bottle stores?

Without the monopoly, West Auckland will almost certainly have more off-licenses than it does today. But that doesn’t mean there’ll be more alcohol-related harm or crime. The monopoly has been in place for over 45 years, yet there’s no evidence that their monopoly (including the low number of bottle stores) has reduced alcohol-related harm.

The current legislation governing alcohol sales, which has been in place since 2012, has a central purpose to minimise alcohol-related harm. Every license application/renewal is reviewed by the police, Auckland Regional Public Health Service, and a licensing officer from Auckland Council. If they believe the application will increase harm, they (or the public) can object, and the District Licensing Committee (DLC) or the Alcohol Regulatory or Licensing Authority (ARLA) will assess the evidence and decide whether to grant the license. If there’s credible evidence that granting the license will result in more harm, then it’ll be declined. They’re not trading off harm against anything else, they’re simply assessing the credibility of the evidence.

So why do some groups claim there are too many bottle stores? In some instances, there probably are too many, which is a hangover of the previous legislation where the object was simply to exert “reasonable control” over alcohol sales. In many cases, it represents a personal view that off-licenses are generally bad for communities, which isn’t supported by credible evidence. Thankfully, our licensing system is evidence-based and doesn’t decline applications on the basis of an objector’s personal preferences.

Let West Auckland choose

West Auckland is currently suffering the consequences of a blunt, out-dated approach to alcohol control. The exclusion of private operators costs us in terms of choice and convenience, and our suburbs in terms of amenity and economic benefit (i.e. local jobs).

The Trusts are not delivering profit from their alcohol business and their strategy to establish a $200 million investment fund is starving our communities of much-needed funding right now.

The costs are real and the benefits are an illusion. It’s time for a change. Sign the petition today and #LetWestAucklandChoose.

Keep going!