Monday, 23 August 2010

The alcohol law reform package (updated)

Overall not great, but could have been a lot worse had the government listened fully to nanny-staters like the Law Commission. From Kiwiblog:
So what is in the Government’s proposals.

1. More powers for local authorities to set a local alcohol policy which will determine locations for licenses premises, trading hours etc. This is sensible in my opinion as the needs of Wainuiomata (for example) may be very different to Courtenay Place.
2. Tighter criteria for off-licenses so only eligible are retailers where alcohol is 85% of sales or grocery stores where food is 50% of sales, or hotels/taverns – unless there are a lack of premises in the area. Again, no real issues with this.
3. Provision of free drinking water a requirement for premises which sell alcohol for consumption on the premises. At present this is a custom, not a requirement.
4. A maximum trading hours for off-licenses of 7 am to 11 pm. I don’t support this, but am glad they at least changed it from 10 pm to 11 pm. I often am doing supermarket shopping at 10 pm, so will be able to grab a bottle of wine still.
5. Maximum trading hours for on-licenses from 8 am to 4 pm. Again I don’t support this, but it is only an hour earlier than the de facto 5 am close most places have. It isn’t true nothing good happens after 4 am – ironically by that time of the night you are normally on non alcohol drinks sobering up. So forcing a closure at 4 am may in fact make things worse.
6. Rejected the proposed one way policy from 2 am. Thank goodness for that. It would have destroyed Courtenay Place as you wouldn’t be able to have outside drinking areas under such a policy. It would also have led to all sorts of problems as people can’t catch up with their friends etc.
7. Local authorities can vary the national trading hours (both shorter or longer) if they wish. So Queenstown for example might set a time beyond 4 am. However their decision can be appealed for reasonableness. I think this is good flexibility.
8. Parliament loses it exemption from liquor licensing laws.
9. Split purchase age of 18 for on-license and 20 for off-license. This will be a conscience vote. This is better than a 20/20 age but is quite deeply flawed. As one looks at the details one will still be able to supply alcohol to 18 and 19 year olds (just not sell it directly) so it will create a culture of supplying alcohol to those who can not legally buying it. You will hear more on this point.
10. Ironically 19 year olds will be able to sell alcohol in supermarkets and bottlestores, but not buy it! To be fair, currently a 17 year old can sell alcohol also.
11. Parents can continue to supply alcohol to their own children at home, or in any private setting or at certain licenses premises such as restaurants.
12. Under 18 year olds can not possess or drink alcohol in public, unless with a parent. This will be a $200 infringement.
13. Consent of a parent is needed to supply alcohol to an under 18 year old, and supply without consent can be a $2,000 fine. Long overdue – finally it is an offence to give a 14 year old a bottle of vodka.
14. The adult who supplies alcohol (with consent) to under 18 year olds must do so responsibly and supervise the consumption. Again – long overdue. This is what may have made a difference to the Kings College case.
15. The 50% increase in excise tax is rejected. Yay. I have yet to see a compelling economic analysis that the current excise tax does not cover the external costs of alcohol.
16. A minimum price regime will be considered in a year’s time once they gather data from retailers. I have some sympathy for a minimum price regime, as loss-leading on alcohol isn’t that desirable. It is a better response than an across the board excise tax increase.
17. Will be an offence to promote excessive consumption of alcohol or to advertise in a way that appeals to those under the purchase age. Also can not promote free alcohol or make purchase of alcohol mandatory for other goods and services.
18. The recommendation to have a total ban on all alcohol advertising and sponsorship has been rejected and sent back to Russia. Having said that I do think the current ASA code on alcohol advertising is ineffective and do actually support there being some sort of penalties for advertisements that breach the code. At present the only penalty is the advert gets withdrawn.
19. Makes it an offence with a fine of up to $2,000 to make a false representation of age. So having a fake ID could not be very expensive. Also an offence to lend someone your ID so they appear 20.
20. They have rejected the proposed $200 fine for people who spend the night in the cells detoxing. I like this proposal but the argument against is it would cost more to set up the fine system, than it would bring in, and also it may discourage drunk people from approaching the Police for assistance – which could lead them to more harm.
21. The Ministers of Justice and Health can ban certain products deemed undesirable such as alcoholic milk, or alcoholic iceblocks. I never knew one could get alcoholic milk!
22. RTDs to be a maximum 5% and also a maximum 1.5 standard drinks. This is also a good move, as it was the RTDs that had four or five standard drinks in them which were plastering people. At 1.5 standard drinks they actually become difficult to get too drunk off.
A few quick comments: Number 1) just means we get local nanny-staters making decisions on how we are to run our lives, rather than national nanny-staters. Is this really any better? God knows what the People's Republic of Christchurch will do with such powers! 1) and 2) look like a windfall for liquor outlets already in place. For more on this see here. Changes to trading hours just stupid. Will do nothing to control drinking and just piss-off people like me who like to shop at late hours. 6) good. 9) This effectively gives a competitive advantage to on-licenses so you will just see an change in demand away from off-licenses towards on-licenses. The total amount of drinking may not change much. And it's not clear why off-licenses should be "taxed" in this way. 15) is good. There is no compelling economic analysis that shows that the current excise tax does not cover the external costs of alcohol. In short, don't believe BERL, believe Crampton-Burgess! For more see here. 16) is stupid. A minimum price regime is just as stupid for alcohol as it is for any other product. If the price is set below equilibrium it doesn't matter and if it is set above, then supply will be greater than demand and consumers lose out. Also it will just make it easier for retailers to find ways to collude and increase prices for alcohol sales. For more see.

Update: Not PC comments here, Roger Kerr here, Keeping Stock here, No Right Turn here, The Dim Post here, Offsetting Behaviour here and Not PC again here.


Eric Crampton said...

High prices are the point of minimum price regulation.

They'll at least have what would have been excise revenue be producer surplus, at least until it's eroded away.

Paul Walker said...

Yes high prices are the point of minimum price regulations but the consumer will lose from this. And more, there will be a deadweight loss.

Eric Crampton said...

Oh, no disagreement on that. It just seemed framed as though it were an unintended consequence that consumers were screwed.