Why liquor licences now cost more

01:05, May 05 2014

Dennis Bush-King backgrounds liquor-licence fees.

The Nelson Mail has recently carried reports about the cost increases of liquor-licence applications. The Government should not be surprised.

The Tasman District Council predicted that costs would increase in a submission to the Parliamentary Select Committee which considered the new Sale and Supply of Alcohol Bill back in 2012.

Tasman Mayor Richard Kempthorne also wrote to Justice Minister Judith Collins promoting a small but vital change once the law was passed. This change would have widened powers of delegation and resulted in less processing effort and cost, but the opportunity was not taken up.

And so it has come to pass; some applicants for liquor licences are facing significantly higher costs for applications under the new legislation. To reflect these new costs, the Government has also passed nationally consistent regulations fixing new fees for applications which are the same whether for premises in Takaka, Auckland, or Bluff.

Some fees are able to be graduated depending on certain situations but the overall result is that application fees are now higher, at least in Tasman district and Nelson city than was the case under the previous regime (the exception being very small club licences which are about the same).


Some people say councils should exercise discretion when dealing with some categories of application. The regulations provide for the exercise of limited discretion over reducing the fees charged, and this already happens in qualifying cases.

In those situations where a reduction does occur, that will be because of reduced effort and complexity.

But, as with any reduction, or even waiver, the question to be addressed is that, if councils do not recover the actual and reasonable processing costs from applicants, who pays?

The general ratepayer, of course, would pick up any shortfall. In Tasman's case, the council seeks to recover 60 per cent of the cost of managing the sale and consumption of alcohol from applicants which still means 40 per cent of the cost is funded through general rates.

This split between "private benefit" and "public good" is not well appreciated but it is important to the way in which the regulatory activities of local bodies are funded.

One of the main reasons for cost increases under the new act is that every application now has to go before the District Licensing Committee (DLC), a committee of council.

This committee is made up of one elected councillor and two appointed members of the public, who are all paid in accordance with scale fees set by the Government.

Even applications which do not attract any opposition have to go through the DLC. Under the previous law staff were able to make these decisions under delegated authority.

Licensing inspectors had to prepare an assessment of each application and, where there was no contest and where there was a favourable recommendation, it was cost-efficient for staff to make the decision. While staff still undertake an assessment of each application, the law now prevents them from making the decision under delegation from the council, so each application must go before the DLC with its associated support costs.

The fees which have been set by the Government reflect these increases in processing effort and, for this, councils should be thankful if the objective is to minimise the impact on general rates.

It is all very well to suggest there should be flexibility when it comes to charging user fees but there is a fine line when local authorities start charging on the basis of who an applicant is, rather than the nature of their activity.

There are many community-based organisations that do wonderful things in the community. But, if their activity is the same as any commercial operator, should not the fee be the same? If the local body is of a mind to offer discounts to certain types of applicant, that should be transparent through some form of grant or offset against general rates.

The fallout from the new fees structure under the liquor-law reforms highlights the importance of some very good observations made recently by the New Zealand Productivity Commission about the way in which central (and local) government enact laws which can have unintended consequences.

The commission has called for a much better design, implementation, and review of the regulations which impact on all aspects of our lives from the food we eat and drink, the environment and buildings we live in, not to mention all the other rules that govern our work and play, our travel, the way we invest our money. The list goes on.

We have to pay to register our vehicles, get a passport, become a New Zealand citizen, register our dog, or to get a building consent.

Should it be any surprise that applications to sell alcohol also attract a fee?

The challenge for both central and local government is to ensure those fees are defensible and reasonable, seek to recover costs, and are not a source of generating surplus income.

That's not the case here - the fees are the product of the regulatory regime the Government introduced.