Our letter to Justice Minister Kiri Allan

17 June 2022

The Hon. Kiri Allan
Minister of Justice

RE: Upcoming review of the Supply & Sale of Alcohol Act (2012)

Dear Minister,

Firstly, congratulations on your recent appointment to the role.

I am writing to you about the upcoming review of the Supply & Sale of Alcohol Act and to urge you to include licensing trusts within the scope of the review.

The West Auckland Licensing Trusts Action Group (WALTAG) is a community group formed to advocate for competition in the West Auckland alcohol market (i.e. the removal of West Auckland’s current licensing trust monopolies). It is our strong belief that licensing trust monopolies cause harm (social and economic) to our communities and deliver no beneficial reduction in alcohol-related harm.

The Law Commission’s report “Alcohol in our lives: Curbing the harm” (2010) which informed the Supply & Sale of Alcohol Act (2012) recommended not to make major changes to licensing trusts due to the “community approval of the role of trusts and the democratic means available for the removal of trust monopolies”. The legislation did not alter the relevant law in a major way.

Since that report was published, licensing trusts have come under increased scrutiny and we believe there are substantive legislative issues which could be addressed. Some of the key issues include:

In a report published in 2014 “Challenges facing licensing trusts”, the Auditor-General stated “there is no comprehensive oversight of licensing trusts generally, other than by their elected trustees on behalf of their communities”. She also commented that a number of trusts “struggle with, and in some cases resist, fulfilling their accountability responsibilities”.

Through our advocacy, we have uncovered some highly questionable activities undertaken by West Auckland’s licensing trusts including the use of public funds for market research and PR advice with an objective to “Identify key arguments to combat the WALTAG campaign”. This research was conducted in June 2019, shortly before the local body elections. We also learned that they had also approved a fighting fund to “meet the challenge from WALTAG head on” and to undertake a “costly battle of hearts and minds of West Aucklanders”. With no Minister or other body providing effective oversight, local body elections are the only means to hold the Trusts accountable for these decisions. Their actions however have undoubtedly influenced elections, and with turnouts between 20 and 30%, there is a strong case for some form of increased oversight by central government.

Community support for licensing trusts is derived in large by their charitable distribution of funds. However most charitable grants attributed to licensing trusts are actually gaming proceeds, and our analysis indicates that commercial profits generated by licensing trusts (returns on equity) are actually lower than those of comparable community organisations without monopolies (e.g. community trusts).

West Auckland’s licensing trusts spend substantial amounts promoting themselves (particularly their charitable giving) to build community support and their messages are not impartial. The Advertising Standards Authority recently found that their advertising was misleading on two separate occasions. Despite that, quantitative research conducted by West Auckland’s trusts in 2020 show that 56% of residents would vote for competition.

There has never been a successful competition proposal organised by anyone other than the supermarkets. In our experience of attempting such, we found numerous barriers which renders the 15% threshold nigh on impossible without access to substantial resources.

We believe that an update of the legislation governing licensing trusts is overdue and we would be grateful if you could include it in the scope of the upcoming review.

Best regards,

Nick Smale, on behalf of the West Auckland Licensing Trusts Action Group