Regulatory Reform - The Silver Bullet For Alcohol Abuse: Yeah Right
Introduction
As a country with a dubious record of alcohol abuse, New Zealand's laws governing access to and consumption of alcohol have always been a heated topic in Parliament and the media. Alcohol is deeply ingrained into New Zealand society, and unfortunately, that means it will inevitably cause harm. As recently noted by Hon Simon Power, in New Zealand, alcohol is estimated to contribute to 1,000 deaths a year, and is implicated in 30% of all police recorded offences, 34% of recorded family violence, and 50% of all homicides. By any measure, alcohol is the most destructive drug in New Zealand.
However the regulation of alcohol has always been a special case. As recently noted by the Law Commission ("Commission"), the history of and social attitudes toward alcohol (and tobacco) are "profoundly different" from those applying to other illicit drugs, which requires a different regulatory approach. The Commission also noted:
This will not please everyone. Many of those who regard the current approach to drugs as illogical, hypocritical, and based on double standards will no doubt want us to take a bolder approach. Law reform, however, is the art of the possible.1
In addition, alcohol laws have traditionally been treated as conscience votes, for reasons that defy rational explanation (the Commission has noted that a conscience vote is essentially a political decision).2 A hangover from enacting laws that are a product of conscience voting is liquor legislation that is ad hoc, inconsistent, and uncertain in its application. For example, the High Court recently upheld the Liquor Licensing Authority's reversal of its previous position that "convenience stores" could sell alcohol on the basis that they were "grocery stores".3 The Court noted that the provision of the Sale of Liquor Act 1989 in issue was introduced by way of Supplementary Order Paper during a conscience vote debate after a number of other versions had been rejected by narrow margins, and that various panels of the Liquor Licensing Authority have given the section different interpretations and/or applications in the 20 years since enactment.
More generally, the Sale of Liquor Act 1989 has been amended eight times, including major changes in 1999 which reduced the minimum purchase age to 18 and allowed beer to be sold in supermarkets. Member's Bills are also frequently introduced (with varying measures of success).
Accordingly, a welcome feature of the Government's recently announced proposal for new alcohol legislation is that, for the first time, alcohol laws are being advanced as a Government regulatory matter such that Government MPs will not be free to vote with their conscience (with the exception of the drinking age). This has by no means reduced the public controversy and associated debate.
The Government's proposals
The current proposals were initiated by the previous Government, following the fatal shooting of South Auckland liquor store owner Navtej Singh in June 2008. The then Government's response was to introduce the Sale and Supply of Liquor Enforcement Bill and to invite the Commission to undertake a "belt and braces" review of the law. Sensibly, the Bill was not progressed in advance of the Commission completing its review. The Commission completed its work a year earlier than originally planned, thanks in large part to Mr Power's determination to have a new Act passed before the next election, but drunken school after-balls, and incidents such as the tragic passing of 16 year old James Webster in May, have also kept alcohol at the forefront of the public conscience.
On 23 August 2010, in response to the Commission's report Alcohol in our lives: Curbing the harm4 ("Report"), Mr Power announced a proposed reform package designed to:
- reduce the harm caused by alcohol use, including crime, disorder and health problems;
- target the key drivers of harm, with a focus on binge drinking; and
- implement an efficient and sustainable solution to addressing alcohol related harm.
The underlying theme is that the regulatory pendulum has swung too far in favour of liberalisation. The laws needs to be tightened to address the core problems of binge drinking by a few, particularly youth, and alcohol-related violence. The following key initiatives seek to address these issues:
Drinking Age/ Youth initiatives
- No one under 20 may purchase alcohol from an off-license, but the legal drinking age at bars, clubs and restaurants will remain 18;
- It will be an offence to supply a minor unless you are their parent or legal guardian or have written consent from their parent(s) or guardian(s);
- Restricting RTDs to 5% alcohol content and limiting RTDs to containers holding no more than 1.5 standard drinks;
- Providing for a process to ban alcohol products which are particularly appealing to minors or particularly dangerous to health; and
- Making it an offence to promote alcohol to under-aged consumers.
Anti-violence/ binge drinking initiatives
- Empowering local communities to decide on the concentration, location and hours of alcohol outlets (including "one way door" policies) through local alcohol policies;
- Setting national default maximum hours of 7am - 11pm for off licences and 8am - 4am for on licences;
- Increasing penalties for a range of licence breaches;
- Strengthening the offence of promotion of excessive consumption of alcohol;
- Investigating a minimum price regime; and
- Improving public education and treatment services for those with dependency issues.
The Report made 153 recommendations for reform, 113 of which are adopted in full or in part by the Government, and 13 of which are adopted in principle but do not require any legislative amendment. This leaves 27 recommendations as either rejected or addressed in a different manner.
Commentary
The Government's reform package has been greeted with mixed yet strong views. Commentary has tended to focus on the balance of the Government's proposal: whether it is too heavy and adversely affects the majority of the population who are moderate drinkers, or whether it is too light and does not go far enough to make a difference.
However, from a regulatory perspective, these are the wrong questions to ask. The essential questions are 'what is the problem, and how can regulation be targeted to fix that problem?'. It should also be asked what regulation can reasonably accomplish without imposing unnecessary compliance costs on businesses and individuals.
These questions are especially complex for alcohol regulation. Although New Zealand's liquor laws have been liberalised over the decades and the current legislation is predicated on only regulating to the extent reasonable, the alcohol industry in New Zealand is in fact heavily regulated. Accordingly, to blame alcohol related harm on a lack of regulation or on the industry itself is much too simplistic. The industry for the most part caters to consumer demand, and heavier regulation will never be a panacea for New Zealand's alcohol abuse. Ultimately, consumption of alcohol comes down to individual responsibility and there is only so much regulation can do to encourage responsible decision-making. That said, regulation does have an important role to play in shaping our drinking habits, even if it can't control them. There is a clear case for some type of regulatory intervention.
In this sense, alcohol law reform will provide a stringent test for the Government's commitment to responsible regulation, under which it will only introduce measures when they are required, reasonable and robust. This commitment recognises that while heavy and blunt regulatory instruments can look good and can be appealing at a superficial level, often they can sidestep the real problem and cause a lot of collateral damage.
Mr Power has therefore perhaps sensibly constrained himself to introducing measures where regulation can be demonstrated to be most effective at addressing the problem of binge drinking, by restricting the availability and accessibility of alcohol. Essentially, this means focussing on the licensing regime and offences regarding supply of alcohol.
The reform package has nevertheless come under fire for not implementing all 153 recommendations contained in the Report. However, Mr Power's Cabinet Paper considers each of the recommendations and provides a reasoned view for the decisions made, consistent with following an evidence-based approach which focuses on using effective regulatory levers to target problem areas.
The rejection of an increase in excise tax has been singled out for criticism. Although it cannot be disputed that price is an effective way to change behaviour, excise tax is an extremely blunt regulatory tool, with little evidence to show that it will be effective in targeting the identified problems. There is a real issue regarding the extent to which excise tax increases will flow through to retail prices. It is therefore perhaps not a bad option for the Government to review the effects of other reform proposals before determining whether excise tax changes, which will negatively impact on low and moderate drinkers, are required.
Supermarkets have also been singled out by commentators as being to blame for the country's alcohol problems, due to their ability to offer lower priced alcohol. The Government has resisted proposals to control how supermarkets display alcohol, mainly on the basis that it will unduly interfere with their right to manage their own business. This reflects that fettering supermarkets' right to compete is a vexed matter. Minimum pricing is nevertheless under consideration for the future and international developments will be monitored. No doubt the recent proposal of a minimum price of 45 pence per unit of alcohol in Scotland will be followed with interest. Indeed, minimum pricing may well be more effective than increasing the excise tax, as it would better target cheap alcohol.
Further, reminiscent of tight tobacco regulations, a ban on alcohol advertising and sponsorship has also been touted as necessary to change New Zealand's drinking culture. It is notable that the Commission's original stance was that the current industry regulation was sufficient. The Commission modified its view in response to the magnitude of submissions it received on this issue. However the submissions cited by the Commission in its Report did not provide evidence of a link between advertising and harm, and the Commission also noted that "links between alcohol advertising and alcohol consumption are not easy to draw in a conclusive manner". The Commission found sufficient evidence to recommend further restrictions, but by way of staged implementation of restrictions over five years. The Government is therefore also justified in taking a cautious approach to advertising and keeping its options open. To justify a ban, there would need to be strong evidence of a link between advertising and harm to overcome concerns under the New Zealand Bill of Rights Act 1990.
A general sense that the Government's response does not go far enough may in fact be a good outcome. If the result is that communities and interest groups increase their efforts to promote education and treatment of alcohol problems, then that would be welcome. On the other hand, it would be dangerous if a perception was created that regulation alone will fix the problem, as that will never be possible.
In summary, although the proposals have been heavily criticised, Mr Power has built on the work of the Commission and introduced a sound evidence-based regulatory package. In this case, perhaps the best measure of its success is that it appears no one is entirely happy with the proposals.
Where to from here?
Mr Power intends to introduce legislation to Parliament in October 2010 and to pass it into law before the end of the Parliamentary term. However, the proposal will have to jump a number of hurdles before parents start writing out consent notes.
The motivation for treating this reform as a regulatory matter is that it is intended to be a single, comprehensive policy which tackles the key issues in one fell swoop. On the other hand, Mr Power has also encouraged debate and further consideration of the issues at the Select Committee stage.
Labour, led by spokesperson for Justice, Hon Lianne Dalziel, will be pushing hard for a greater number of the Commission's recommendations to be adopted. Hon Tariana Turia has stated that she intends to support the reform to Select Committee stage so that the Maori Party can hear public feedback on the proposed changes.
Submissions on the Bill will no doubt be polarised and passionate, and it seems likely that there will be a 'bar fight' over the details of how any Bill should be amended by the Select Committee. It therefore remains to be seen to what extent Cabinet will be willing to compromise and accept amendments to the Bill at that stage. There remains a risk that, reminiscent of the conscience voting days, there will be last minute political deals on amendments to facilitate the passage of legislation, and that the Bill will therefore be extremely vulnerable to amendment before it is passed.
In this context, it should be borne in mind that the vast majority of submissions to the Select Committee will be from parties with vested interests, who have concerns about the way alcohol is regulated. Millions of alcohol consumers in New Zealand will not lift a finger, and will entrust the Government not to unduly interfere with their enjoyment of the odd drink or two. It will therefore be quite a challenge for Parliament to maintain the rational and evidence-based approach to regulation that has been followed to this point.
Irrespective of different viewpoints there is at least consensus that alcohol laws are ripe for change. So while it might not yet be time for Mr Power to crack open the celebratory champagne, he should probably put it on ice.
Contributed by Victoria Irwin and Craig Shrive
2 Law Commssion, Review of Regulatory Framework for the Sale and Supply of Liquor - Part 1 : Alcohol Legislation and the conscience vote (NZLC R106, 2009) at paragraph 3.23.