NTCOSS wishes to thank the Northern Territory Government for endorsing recommendation 2.4.1 of the Alcohol Policies and Legislation Review (Riley Review 2017) and for providing an opportunity for public comment on the draft risk-based licensing (RBL) framework.
While the draft framework is just one component of a significant package of proposed alcohol reforms flowing from the Review, it represents an important step towards implementing recommendation 2.4.1 aimed at bringing the Northern Territory into line with other jurisdictions with respect to the introduction of annual RBL fees.
NTCOSS SUPPORT FOR ANNUAL RISK BASED LICENSING FEES
NTCOSS supports in principal the proposed introduction of risk-based licensing. The Riley Review (2017) highlighted that the absence of RBL puts the Northern Territory liquor licensing regime significantly out of step with other Australian jurisdictions. Since 2009 other States and Territories including the Australian Capital Territory (ACT), Queensland, Victoria and New South Wales (NSW) have progressively introduced RBL as a way of ensuring that those who profit from the sale of alcohol also contribute to the administration costs and societal harm associated with alcohol including ambulance and police, hospitals, social workers and AOD treatment services. RBL is also now being considered in South Australia and Western Australia.
By comparison with other jurisdictions the Northern Territory has required only a one-off application fee of $200 for liquor licenses with no subsequent annual fees. According to the Foundation for Alcohol Research and Education (FARE), ‘NT liquor licence fees are almost non-existent and are the lowest in the country. High risk venues pay the same one off fee as low risk venues, with type, size of venue, trading hours and level of harm impact completely ignored,’ and ‘there is no incentive to reduce the risks associated with a venue given limited licence fees and arbitrarily assigned licence categories’1. As a jurisdiction with arguably the worst history of alcohol-related harm and associated societal cost in Australia the Northern Territory is clearly in need of consistent, effective and adequate licensing reform that shifts the burden of cost away from taxpayers to those making profit from the sale of alcohol.
While Industry submissions to the Riley Review supported continuation of application fees, especially for new licences, there was strong opposition in Industry submissions to the introduction of annual fees. Regardless, the Review identified that ‘an overwhelming number of submissions support the introduction of a risk based annual fee’ and appropriately recommended its introduction as part of a new and ‘effective regulatory framework’.
NTCOSS RESPONSE TO THE DRAFT RBL FRAMEWORK
The Riley Review recommended that an annual risk-based licensing fee be introduced for all liquor licence categories based on the following principles:
- a base fee that applies to the different categories of licence
- a loading fee to reflect the patron capacity of the venue for on-premises and club licence categories
- a loading fee for the takeaway licence category based on volume of sales
- a loading fee for extended hours authorities
- a loading fee attributed to poor compliance history.
In June 2018 the Northern Territory Government released its response to the Review recommendations, agreeing in principal to recommendation 2.4.1 stating that annual fees ‘will be considered as part of the Liquor Act rewrite, which is an important part of the Alcohol Harm Minimisation Action Plan 2018-2019.NT’.
NTCOSS congratulates the Northern Territory Government for swiftly progressing the development of an RBL framework. However, while we acknowledge that the draft framework incorporates a number of key aspects of Recommendation 2.4.1 of the Riley Review, we are concerned that a number of risk components have not been included and that the introduction of ‘discounts’ enabling licensees to reduce fees by up to 70% has the potential to undermine the impact of the annual fees and to reduce the impact of breaches (see comments in 2. Discounts below).
1. Base Fee
NTCOSS welcomes the introduction of base fees comprising the assessed risk of the different authority fees making up the licence. However, given the considerable cost and potential harm to society that can be generated by the sale of alcohol from the range of venues identified, it is our view the base fees indicated are too low. Proposed NT base fees range from $100 for very low risk venues to $2,000 for very high risk venues. Once multipliers for opening hours and volume of alcohol sold are applied to the base there is still the option of applying up to 70% reduction through discounts.
NTCOSS recommends that additional risk components be added as per the Riley Review recommendations and PAAC and FARE submissions (see 2. Licensing Fee components below) which will have the effect of overall fees proportionate to risk and providing genuine incentives for rapid change by licensees.
In addition NTCOSS queries the process for determining the level of risk for some different authority types. For example, Casinos are rated as a ‘moderate’ risk attracting a base fee of just $500. Greater transparency about how the risk level and rate has been determined is needed.
2. Licensing Fee Formula Components
The draft RBL framework includes the following license formula components:
- A base fee (total of all the authority fees for the licence)
- Trading hours (hours of trade as per their licence)
- Standard hours (the average trading hours for venues of that type)
- Venue Volume (the volume of liquor purchased by the venue from wholesalers in the previous year)
- Standard Volume (the average volume of liquor recorded for that type of authority in the previous year)
- Discounts (for security, CCTV, live original local music/entertainment, membership of an industry body, accords, good compliance history)
- Any loading for breaches of the licence and/or Liquor Act.
NTCOSS recommends that the framework also adopt the additional formula components recommended by the Riley Review including:
- A risk loading associated with patron capacity of a venue that sells alcohol for consumption on the premises
NTCOSS also supports additional loading as recommended by FARE and PAAC including:
- A loading for precincts and in hot spots for crimes against the person including assault; and
- A loading fee for the number of licensed venues owned by an operator, as per the NSW model.
NTCOSS also proposes that licensees be charged a higher fee for operating outside of standard hours to encourage reduction in those high risk hours and associated alcohol-related harm. This should be achieved by applying a higher multiplier for high risk hours (after 10 pm, then higher again after 1am) rather than achieving reduced hours (which could be in the low risk time period) through ‘discounts’.
3. Discounts
NTCOSS is strongly opposed to the inclusion of ‘discounts’ in the annual licensing formula. Discounts are not included in any other jurisdiction and could potentially have the effect of reducing the licence fee so significantly (up to 70%) that any breach charges imposed are almost negligible. The preferred mechanism for licensees to reduce their license fee is to make changes that reduce the loadings applied to their base fee eg. by reducing opening hours in the high risk period after 10pm.
It is difficult to fathom the public benefit of enabling a bar with takeaway to reduce their base fee of $3,000 to just $900 by introducing security and/or CCTV to their venue, providing local entertainment, take out membership of an industry body, join a liquor Accord or have a good compliance record. It is NTCOSS view that the cost of a licensee choosing to adopt any or all of these initiatives should be borne by the licensee. The clear incentive being that these initiatives, especially security and CCTV, may help them to avoid future breaches and additional license fees.
In summary, we believe the proposed discounts any higher than a total of 10% limit the capacity of liquor licenses to significantly contribute to the costs associated with alcohol administration and harm, add a layer of complexity through proposed deductions to license fees and are unlikely to offer an adequate incentive to industry compliance and reform.
4. Breaches
NTCOSS agrees with PAAC and FARE’s position that not enough information is provided about what constitutes a breach, whether all breaches are treated in the same way, or whether some breaches are more serious than others. Greater transparency is required to provide clarity about how breaches will be handled and confidence in the process.
We are also concerned that there are no additional consequence for licensees that repeatedly breach their licence conditions year after year and consideration should be given to the introduction of a ‘three strikes’ system similar to NSW that imposes loss of license for repeat offender licensees. These penalties provide an added incentive to licensees to better manage and reduce their risk.