Part 12: Liquor licensing by territorial authorities

12.1
Under the Sale of Liquor Act 1989 (the Act), each of the 73 territorial authorities (city and district councils) has the status of District Licensing Agency and is responsible for considering applications and issuing licences for the sale and supply of liquor to the public.

What we looked at

12.2
The Auditor-General's interest in the regulatory practices of local government led to a performance audit in 2007 to examine how licensing agencies were managing their liquor licensing responsibilities under the Act.¹ We assessed how 12 licensing agencies were using the powers the Act conferred on them. We were interested to see whether the purpose 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 licensing agencies.

12.3
Specifically, we looked at:

• the resources and systems supporting licensing agencies;
• compliance monitoring by the licensing agencies;
• the service offered by licensing agencies to applicants, licensees, and the public; and
• licensing agencies' compliance with the liquor licensing legislation.

What we found

12.4
Overall, we found that licensing agencies were, by and large, doing a good job. However, the audit identified some important areas for improvement.

12.5
Our examination of the resources and systems supporting licensing agencies identified the absence of informed and systematic approaches to determining resourcing requirements. We were not satisfied that the time of territorial authority staff allocated to liquor licensing work accurately reflected the full range of tasks associated with carrying out this regulatory function, including active monitoring of licensed premises. We identified a need for licensing agencies to clearly define the scope of their statutory responsibilities under the Act, specify the nature and purpose of activities required to give effect to those responsibilities, and provide the necessary resources to carry out those activities.

12.6
To effectively administer the Act, licensing agencies must work closely with the Police and public health services. We found evidence of close, collaborative working relationships. We considered that a formal agreement between the local licensing agency, the police, and the public health services to record the common goals, differing roles, and agreed approach to processing applications, sharing information, and pooling resources would help co-ordinate information between the three groups.

12.7
In terms of compliance monitoring by licensing agencies, we considered that the Act clearly made licensing agencies responsible not only for issuing liquor licences but also for monitoring and enforcing compliance with licence conditions and the Act. Not all licensing agencies were sufficiently committed to this responsibility. We expected all licensing agencies to consider whether they had enough resources allocated to this work, and to follow active and systematic monitoring strategies.

12.8
The customer service that licensing agencies offered to applicants, licensees, and the public was responsive to their needs. We identified some areas for improvement, such as greater use of training and education by licensing agency staff to encourage greater voluntary compliance, the use of target time frames for processing applications, and surveying of licensees to assess their satisfaction with licensing agency service.

12.9
Licensing agencies were generally applying the provisions of the liquor licensing legislation consistently. However, licensing agencies were not always using documentation or following procedures that, in our view, clearly complied with the legislation. We considered that this exposed the licensing agencies to risks that the processes leading to decisions, or the validity of those decisions, were open to challenge.

12.10
In planning the audit, conducting fieldwork, and drafting our report, we consulted closely with a range of agencies with an interest in liquor licensing. Our findings and the issues we raised for consideration by territorial authorities were widely supported.

Follow-up since our report was published

12.11
Our performance audit report was published in November 2007. We are already aware of territorial authorities that have reviewed their liquor licensing practices against the better practice guidance in our report. We have made presentations to territorial authority managers and other stakeholders, setting out the findings from the audit and indicating areas for improvement. Our commentary on the roles and responsibilities of territorial authorities in administering the licensing legislation contributed to the broader national debate in 2008 about the responsible use of alcohol in the community. In August 2008, the Law Commission announced its intention to review the Sale of Liquor Act 1989. This will be a comprehensive review to examine and evaluate the current laws and policies relating to the sale, supply, and consumption of liquor in New Zealand.

12.12
Since our report was published, we have worked closely with Local Government New Zealand to identify areas of priority for improving licensing practice, and to co-ordinate initiatives to share and promote guidance for the sector. Local Government New Zealand has provided active support for our work, and we intend to maintain close contact with it on matters relating to our report.

12.13
We have encouraged each territorial authority to review its own practices against the framework for better practice outlined in our report. However, we recognise that changes to practices and procedures can take time to consider and put in place. We intend to seek feedback on each territorial authority's response to our report in July 2009.

1: Office of the Auditor-General (2007), Liquor licensing by territorial authorities, Wellington.