Wide impact of court’s liquor licensing decision

In early May, the Supreme Court ruled against Foodstuffs North Island and Woolworths preventing Auckland Council restricting liquor sales, but this took six years of court cases before council could begin to exercise its right to implement mechanisms to address locally identified alcohol-related harms. What took the council so long?

The Sale and Supply of Alcohol Act 2012 was intended to give local authorities the ability to develop Local Alcohol Policies (LAPs) in consultation with their communities, to address locally identified concerns, to influence the location, number and trading hours of businesses licensed to sell alcohol.Auckland Council started preparing for its alcohol policy in 2011, researching alcohol-related harm in Auckland, economic assessments, and what local authorities in jurisdictions similar to New Zealand’s were doing.

It first released its provisional LAP in 2015. Based on its findings and public submissions, this made several important departures from the status quo.

For example, the act’s default maximum trading hours for off-licences was 7am to 11pm, which Auckland Council proposed reducing to 9am through to 9pm. It also proposed restricting new off-licences in areas already experiencing or likely to experience higher rates of harm such as hospital admissions and crime related to alcohol.

But Foodstuffs North Island and Progressive Enterprises (now called Woolworths) claimed the policy was unreasonable and lodged an appeal with the Alcohol Regulatory and Licensing Authority (ARLA). A review of local authorities’ progress towards LAP development in December 2017 revealed that 32 of 33 publicly notified provisional policies from across New Zealand had been appealed, with 30 of those naming either Progressive Enterprises or Foodstuffs, or both, as appellants. All of the changes made to policies after appeal resulted in less restrictive LAPs than those originally developed by local authorities and communities.

Auckland Council’s 2014 economic impact assessments estimated that reducing off-licence hours to the default national hours would reduce sales by $7m, but decreasing hours to 9am to 10pm across Auckland would reduce sales by $35.5m. Supermarkets were likely to feel most of this, at nearly $13m of the total. In 2015, three quarters of all alcohol sold in Auckland was sold by off licences, and nearly half of that was sold by supermarkets. But 2023 figures show that supermarkets make up less than 10 percent of the 945 off-licences in Auckland.

Price and availability are important influences in how much people drink. Just months after the Sale of Liquor Act 1989 allowed supermarkets and grocery stores to sell wine, there was a sudden and permanent increase in wine consumption by 16 percent. There were more places to buy alcohol, and prices dropped. A 2021 Auckland price audit found 23 of the 25 cheapest beer, wine, and cider products were sold in supermarkets. But LAPs don’t allow local authorities to control price, only availability.

About one in five people in New Zealand drink at a hazardous level which not only affects the health of the drinker, but also the wider community through mental health impacts, crime, injuries, and violence.

The supermarkets are adept at arguing their corners. In 2018 we analysed the evidence statements of four expert witnesses hired by one of the supermarket retailers to appeal Auckland’s policy, to understand how they framed their arguments.

Each of the four statements of evidence described each witness’s qualifications and areas of expertise: the witnesses included a planning expert, a public health director, a market analyst and a data analyst. They stated that they had read and would comply with the High Court’s code of conduct for expert witnesses, and that the code of conduct requires expert witnesses to “assist the court impartially” rather than advocate for the party who engaged them.

The witnesses had evidently collaborated, as their evidence statements were mutually reinforcing. Three explicitly stated they’d read the evidence presented by the other witnesses, with one even saying their evidence “relies on and should be read together with the evidence” of the others.

The expert witnesses narrowed alcohol-related harm to acute harms which they presented as police-related events such as assault, sexual assault, disorder, or liquor ban breaches. These incidents were blamed on the “irresponsible drinking behaviours” of individuals, which they said the police and council already had powers to control without affecting all off-licenses. By focusing on police events and excluding chronic health harms, they framed these incidents as the fault of irresponsible individuals, and had little to do with market forces.

Another central theme among the four witnesses was that there was a lack of evidence that Auckland’s policy would reduce alcohol-related harms. They claimed the international evidence wasn’t relevant to New Zealand, and that the national evidence wasn’t applicable to Auckland supermarkets. Rejecting evidence is a standard industry tactic and is presented as the basis of their opposition (rather than the threat to their commercial interests).

In 2017, ARLA dismissed most of the supermarket retailers’ appeal. Foodstuffs North Island and Progressive Enterprises went on to spend six years fighting this through the courts, only for the Supreme Court to agree with ARLA. The court found that local authorities, under the act, must consult their communities and therefore policies should reflect community preferences. It concluded that local authorities don’t need evidence to prove an element will reduce harm, only that there is a reasonable likelihood it will. Communities have the right to take a precautionary approach.

Auckland Council’s lawyers, Simpson Grierson, believe that the Supreme Court’s decision has important implications for other local authorities, that they can be confident that local alcohol policies can truly reflect what communities want without fear of expensive, drawn-out legal battles.

Community groups, NGOs, and local authorities have been lobbying unsuccessfully for the Government to remove the appeal process. Many local authorities without Auckland Council’s resources have dropped their policies or diluted them significantly to avoid costly legal battles. It cost Auckland ratepayers over $1m.