Democracy Inaction

We consider that licensing trusts are probably the least scrutinised part of the public sector

No central government agency or select committee has overall oversight or monitoring responsibility for licensing trusts.  This is largely because those agencies’ areas of responsibility are quite narrow and specific, which does not support broader engagement.

 

Lyn Provost, New Zealand Auditor-General, 2014

 

These are direct quotes taken from the Auditor-General’s 2014 report into licensing trusts.  In that report, and her follow-up report in 2017, Lyn Provost (the then Auditor-General), highlighted serious concerns about governance, financial management, and lack of public accountability of licensing trusts.  Whilst the concerns raised by the Auditor-General are most critical for smaller Licensing Trusts, some of which are failing to deliver financial reports and struggling to remain solvent, the lack of coherent oversight is a cause of significant concern for all licensing trusts.

In the case of West Auckland, The Trusts own substantial assets on behalf of the community, in addition to the millions of dollars in their bank account (their total assets are estimated at over $90m). Of the few remaining licensing trusts in New Zealand with a monopoly on alcohol sales, The Trusts are easily one of the largest, and for many West Aucklanders, many of the trustees are also their local board members and councillors.  

It is not just the Auditor-General’s office that is concerned about how licensing trusts operate.  We have been trying for some time to get a picture from The Trusts about their financial position and what exactly they are giving back to West Auckland, as well as the amounts of money they are spending on their corporate staff.  On 9 May 2018, West Auckland Licensing Trust Action Group (WALTAG) wrote to Linda Cooper (President of the Waitakere Licensing Trust) and Ross Clow (President of the Portage Licensing Trust).  In that letter we sought information about The Trusts, including amounts distributed to the community, information (including financial statements) about West Auckland Trust Services Ltd -the jointly owned company formed by The Trusts to carry out its commercial functions, including the supply and sale of alcohol through its bars and bottle shops. The letter was copied to Simon Wickham, the CEO of The Trusts.  

Linda Cooper and Ross Clow are also councillors for Auckland Council, and in addition to the salary they receive from Council, they are paid $30,000 each for their roles as presidents of the licensing trusts.  In comparison, the chairs of the few remaining licensing trusts in New Zealand receive a fraction of that sum – for example, the honorarium for the President of the Birkenhead Licensing Trust receives $3,500 per year.  As trustees, Linda Cooper and Ross Clow are elected by the community. The CEO is not elected and the community has no direct say as to who is appointed or on what terms or remuneration.

In addition to the financial information, we also requested that The Trusts provide further details about the market research that they claimed backed up their recent assertion to media that 70% of West Aucklanders were in favour of The Trusts current model.

On 25 May 2018, Simon Wickham responded on behalf of The Trusts.  In that letter, he stated that the information sought was being treated as a request under the Local Government Official Information and Meetings Act 1987 (LGOIMA).  Because of that, The Trusts had twenty working days to respond to our original request of 9 May 2018.  

And so we waited.  

On 1 June 2018, Simon Wickham responded stating due to the substantial collation of material you have requested, we will now be providing you the response by 7 June 2018.

Late in the afternoon of 7 June 2018, Simon Wickham responded.  Despite our request for information that would shed some light on how The Trusts are being run and how West Aucklanders’ money is being spent, The Trusts didn’t see fit to provide a meaningful response.  Although Simon Wickham said what we had sought was “substantial”, the letter included little information – none of which was the information we wanted, and some of which was on The Trusts’ website anyway.

It is not good enough that The Trusts’ CEO waited until the last day before the deadline for having to provide information, and then provided information that we already had, or information that we did not ask for.  Despite the rounds of correspondence, we were no better informed than when the original letter was sent. The response from The Trusts is not good enough. Even worse is the deafening silence on behalf of the elected trustees, including the presidents of the two licensing trusts, who are supposed to be accountable to the public.

It is unacceptable that the trustees of The Trusts essentially abdicate requests for information to an unelected CEO and when we expressed our disappointment about quality of the information provided, left us with no option but to pursue matters with the CEO.  In our view, this is not on, and we expect more from our elected representatives, especially when they are paid by West Aucklanders to preside over those trusts. It doesn’t really inspire much confidence in the system when very reasonable requests for information about tens of millions of dollars (held on behalf of the West Auckland community) are directed to an unelected CEO. The only real accountability that the public can expect is when the trustees and elected officials engage with the people who vote them in. This is clearly not the case here.

Some people have said that the ability to vote and elect new trustees every three years means that the community has control over licensing trusts.  However the current crop of trustees read like a “who’s who” of local government – many of them have been on the licensing trusts, local boards, and local councils for decades (and many of whom sit on more than one organisation and have done so for years).  With voter turnout for local elections barely above 35%, how on earth do The Trusts (or the trustees) really hold themselves representative or accountable to the 285,000 people they hold significant assets on behalf of?

A quick glance at the 2016 candidates for the Portage Licensing Trust and Waitakere Licensing Trusts shows that in many cases, candidates stood practically unopposed.  The trustees control millions of dollars of community assets and are elected by the public, but when the community wants to find something out about that funding or the millions of dollars squirreled into The Trusts’ investment portfolio, suddenly the door slams in the public’s face.  It is rather concerning that many of those trustees, also sit on local boards which are desperate to revitalise their town centres but sit as trustees on an organisation intent on protecting its monopoly. It really does make you wonder what vision these trustees have for West Auckland?  Are they actually representing the interests of a changing West Auckland?

Because The Trusts treated the request for information under LGOIMA, we have had no choice but to complain to the Ombudsman about how the request was handled.   Escalating matters to the Ombudsman seems extraordinary. From our experience to date, it seems that they are anything but transparent.  Shortly after complaining to the Ombudsman, we were provided some information from The Trusts, primarily a breakdown of how much they’ve given back (some of which was obtained from other sources)

Looking at these figures, it’s no wonder The Trusts wanted to sit on them – remember The Trusts are sitting on an estimated $90m in assets and turning over $100,000,000 per year in revenue.  We have already raised concerns about the enormous marketing budgets and sums of money being ploughed into The Trusts’ advertising (the 2017 Million Dollar Mission had a marketing budget of $200,000 alone), but when The Trusts are giving back approximately $4 per person per year, this does raise some rather reasonable concerns about how much of West Auckland’s spending is propping up their awful bars and restaurants and the (unknown) head office costs.

It is clear from this experience that the Auditor-General had good reason to be concerned. What is even more concerning is that even after her report in 2014, and despite the serious concerns raised in it, the responses from various licensing trusts remained “static”.  Organisations that don’t respond to the reasonable demands of the community and the changing tastes and expectations of the public will continue to flounder. In the coming weeks and months, we will be delving deeper into The Trusts’ finances.

We have followed up our original request for further information about The Trusts’ finances.  Unfortunately The Trusts have taken the approach that they will be charging us $76 per hour to obtain information that the public should be able to easily obtain.

As matters move forward, expect The Trusts to throw everything behind opposing the petition – it would be nice to think that The Trusts heed the concerns of the Auditor-General.