Part 1: Introduction

Liquor licensing by territorial authorities.

1.1
Under the Sale of Liquor Act 1989 (the Act), each of the 73 territorial authorities has the status of a District Licensing Agency (DLA). DLAs issue liquor licences to people, businesses, or other entities, enabling the licensee to sell and supply liquor to the public at the premises named on the licence (known as licensed premises). Licensed premises include hotels, restaurants, clubs, bottle stores, supermarkets, cafes, and nightclubs. DLAs also issue certificates to individuals, enabling the individuals to manage premises that hold a liquor licence.

1.2
Licensing managers and premises to sell liquor through the provisions in the Act is one of a range of legislative measures and policies designed to reduce alcohol-related harm.1 The Ministry of Health, the Accident Compensation Corporation, the Police, and the Alcohol Advisory Council of New Zealand (ALAC) all have strategies to reduce alcohol-related harm that refer to the importance of enforcing the Act.2

1.3
This report sets out the results of the performance audit we carried out to examine how DLAs were giving effect to the provisions of the Act - controlling the sale and supply of liquor to reduce alcohol-related harm.

1.4
In this Part, we describe:

  • the objective of the audit;
  • how we prepared for the audit;
  • how we selected the sample of territorial authorities; and
  • how we carried out the audit.

The objective of the audit

1.5
We carried out a performance audit to examine how selected territorial authorities were using the powers conferred on them by the Act. We were interested to see whether the intent of the Act - controlling the sale and supply of liquor to reduce alcohol-related harm - was reflected in the systems and processes used by the territorial authorities. We also sought to assess how well the needs of licensees were being met.

1.6
The audit was designed to provide assurance about liquor licensing practices in a selection of territorial authorities, identify any broad issues for local government, and describe areas of good practice that other territorial authorities might find useful.

1.7
Liquor licensing activities in territorial authorities are funded from two sources − fees (set by regulation) and rates. We did not examine how these sources of funding are used and applied; nor the adequacy of fees to meet the costs of territorial authorities carrying out this regulatory function.

How we prepared for the audit

1.8
To prepare for our performance audit, we studied the Act, the available guidance on the interpretation of the Act, and relevant liquor licensing case law.

1.9
We read the available research on liquor licensing administration and enforcement practice in New Zealand. We kept in mind the principles of good regulatory process, drawing on our past work and other sources of good practice.3

1.10
We consulted the Police, the Ministry of Health, the Alcohol Advisory Council of New Zealand, local government representatives, and representatives of the liquor industry. We also visited two territorial authorities to find out how they processed liquor licence applications.

1.11
We also sought the views of the Liquor Licensing Authority (the Authority, whose role we explain in Part 2) before carrying out our fieldwork.

How we selected the sample of territorial authorities

1.12
To decide which territorial authorities to include in our audit, we analysed the annual reports of DLAs for information on the number and types of applications they processed, as well as information on their monitoring and enforcement activities.

1.13
Territorial authorities vary significantly in scale and structure, and serve quite different communities. Consequently, the nature and scale of liquor licensing activity diff er markedly. The number of licensed premises within a district varies from 1000 or more in the largest cities, where large numbers of applications are processed, to districts with fewer than 50 licensed premises, and few applications. We selected 12 territorial authorities, taking account of factors including the number of applications processed, the number of licensed premises, and the type of community in which each was working.

1.14
The 12 territorial authorities were:

  • Auckland City Council;
  • Christchurch City Council;
  • Dunedin City Council;
  • Invercargill City Council;
  • Kapiti Coast District Council;
  • Kawerau District Council;
  • Manukau City Council;
  • Palmerston North City Council;
  • Rotorua District Council;
  • South Waikato District Council;
  • Southland District Council; and
  • Westland District Council.

How we carried out the audit

1.15
For each territorial authority, we:

  • examined manuals, policy documents, check sheets, guidance material, and application forms;
  • asked inspectors and support staff about their work;
  • asked relevant managers within the territorial authorities about resource planning and performance reporting for liquor licensing;
  • examined systems for recording the status of applications and licences, supporting documentation, and compliance activity; and
  • examined a sample of licence documentation to check compliance with the Act and the Sale of Liquor Regulations 1990 (the Regulations).

1.16
We asked selected licensees about the services provided by their DLA.

1.17
We asked local public health services and the Police about their working relationships with the DLA. We also sought the views of regional managers from the Hospitality Association of New Zealand on DLA processes and wider licensing issues.

1.18
At the end of each visit, we provided each DLA with our views on its practices, making suggestions for improvement where appropriate.

1: Others include drink driving laws, liquor bans, environmental planning considerations, restrictions on liquor advertising, duties, and a minimum age for purchasing liquor.

2: The Alcohol Action Plan, published by the Police in March 2006, refers to overseas studies that suggest that 50-70% of all police work is associated in some way with alcohol. It also refers to research indicating a connection between alcohol abuse and violence, and poorly-run licensed premises. The Alcohol Action Plan outlines a range of actions to better monitor and enforce the requirements of the Act, and to promote more responsible management of licensed premises.

3: For example, Administering Regulation, a Better Practice Guide published by the Australian National Audit Office in March 2007, outlines a set of principles for effective regulatory process.

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