Licensing trust
Under New Zealand law, a licensing trust is a community-owned company with a government-authorised monopoly on the development of premises licensed for the sale of alcoholic beverages and associated accommodation in an area. This applies to both on-licence and off-licence sales.
The Invercargill Licensing Trust in 1944 was the first such body, and remains the highest profile example. Most other trusts have been small by comparison, but several have now created a jointly owned management company, , and the assets and payouts of this are very similar to that of the ILT.
The uniqueness of licensing trusts revolves around:
- A responsibility to enhance the well-being of their defined community;
- The distribution of profits back to their communities;
- The provision of good, model facilities for the sale of alcohol, the provision of accommodation and meals, and gaming;
- Accountability to the communities who own them.
Licensing trusts belong to the family of community enterprises that are part of the third sector, a hybrid form of organisation that crosses over sectors, a mixture of market orientation and solidarity. They may be defined as businesses whose primary goals are to support the well-being of their community principally through reinvesting profits generated from their trading activities either in the business and/or in support of community activities, rather than being driven to maximise profits.
The only "essential" liquor outlets allowed to stay open during the COVID-19 pandemic were the ones in "Trust" areas where they had a monopoly on liquor sales and local supermarkets could not sell beer or wine.
History
Context
In the early history of New Zealand, living conditions were often difficult, and hard drinking and the often consequential drunkenness can be seen as a reaction to the times. Abuses, which were common during the nineteenth century, inevitably brought increasing restrictions through legislation.These abuses gave rise in the late 1800s to the temperance and prohibition movements.
In 1893, the Alcoholic Liquors Sale Control Act aligned licensing districts with parliamentary electorates. Licensing polls were to be held with each general election. There were now three options to choose from. These were "continuance of the status quo", reduction of the number of liquor licences by 25 percent, and "local no-licence" which would prevent public sale of alcohol within that electorate. Continuance and reduction only needed a majority, but local no licence needed three-fifths majority.
What resulted was that a number of areas voted for a prohibition on alcohol sales. Clutha was the first in 1894, Ashburton and Mataura followed in 1902, Invercargill, Oamaru, and Grey Lynn in 1905, and Bruce, Wellington South, Wellington suburbs, Masterton, Ohinemuri and Eden in 1908. 1911 saw the peak of the prohibition movement when it failed by only 20,000 votes to carry national prohibition. Thereafter the strength of the prohibition movement faded. But it was 1999 before the last "dry" areas disappeared.
Emergence of licensing trusts
On 25 September 1943 the voters of Invercargill, by 8,015 votes to 6,342, restored the sale of liquor within the borough. Prohibition had existed for 38 years and the voting, on the face of it, was apparently a clear indication there was a mood for change. But controversy immediately arose. The 60% threshold necessary to achieve change had only been achieved with the overwhelming support of the soldiers’ votes overseas. The ‘domestic’ vote had been similar to the previous triennial polls at 56.8%. There were suggestions that the voting papers of the soldiers should be returned to New Zealand and recounted. But it was found they had been destroyed in the Middle East. While a good deal of inferences were thrown about, and the Prime Minister, Peter Fraser, offered explanations and a report to Parliament, there was no evidence that what had occurred in destroying the papers was anything other than a misunderstanding. Given the circumstances of the soldiers, it was entirely reasonable that they would give overwhelming support.In Invercargill there was a mood of enthusiasm to start anew, but there were also considerable concerns. In the end because the community could not make up its mind, the Government decided. On 27 March 1944 the Government announced that they intended to pursue legislation that would set up a trust that would be "...a body corporate, for the purpose of providing for the establishment of model hotels in the Invercargill licensing district …in the interests of the public well-being, and of providing for the sale of intoxicating liquor in the district and to provide for the distribution of the profits for public purposes."
The New Zealand parliamentary debates during the introduction of the first licensing trust legislation suggest the New Zealand legislation was based on the British "Carlisle Scheme" that had been established during the First World War on the Scottish border, but there were also significant differences.. Rex Mason was Minister of Justice from 1935 to 1949 and responsible for the licensing legislation. He shepherded the licensing trusts acts through Parliament, and was strongly committed to the concept of licensing trust.
The Invercargill Licensing Trust Act 1944 came into force on 17 April 1944. The Masterton Licensing Trust Act followed in December 1947,
and the Licensing Amendment Act in 1949.
Trusts established and demised
30 licensing trusts were established, and 18 remained active as of 2017:While not all licensing trusts have survived, the 19 that continued to actively trade in 2008 held assets of NZ$313 million, generated revenue of $357m, profits of $42m, and donated support to their community of $33m. The collective results of the trusts were presented to the Law Commission in October 2009 as part of a submission, and showed that licensing trusts at that time operated 133 licensed premises which include hotels totalling 890 accommodation units, and such diverse activities as supermarkets, a housing estate, a hydro-electric power scheme, and property portfolios.
Poor management and governance have been identified as the main reasons for the demise of many of the now dissolved licensing trusts.
Elections and accountability
The functions of a Licensing Trust are specified in Section 305 of the "Sale and Supply of Alcohol Act" of 2012.Trustees for each licensing trust are elected by the community every three years at the triennial local government elections. Generally six trustees are elected, but some trusts with a ward system may have up to nine. The elective nature of governance provides accountability and a direct link to the community. However, elections for the position of trustee are often poorly contested.
Areas do not automatically vote on whether to keep trusts, if they have them, or to establish them if they do not. However, if the trust's board so resolve, or 15% of the electors in a trust area petition for it, a referendum will be held on whether to continue the trust. If 50% of electors vote to abolish it, the trust is disestablished and liquor sales revert to the rules that apply to most of the country.
The same process allows new licensing trusts to be created upon the petition of 15% of the electors in an area, and this would happen without any further referendum or input from the remaining 85% of electors. However, no new trusts have been established since the liberalisation of liquor laws in 1989.
Lincensing trusts are considered by the Office of the Auditor-General to be "probably the least scrutinised part of the public sector".
As they are not listed with the Companies Office, the accounts of lincensing trusts are not able to be easily scrutinised by the public, and they have often been late in filing their accounts with the Auditor-General.
Further, as no central government agency, select committee or local authority has responsibility for monitoring them, there is no government department to which the public can raise complaints when they have issues with the trusts. The only means through which the public can oversee the trusts is by making a request under the Local Government Official Information and Meetings Act 1987.
Trustees
Auckland
Birkenhead Licensing TrustMount Wellington Licensing Trust
Portage Licensing Trust
Waitākere Licensing Trust
'''Wiri Licensing Trust '''
Waikato
Te Kauwhata Licensing Trust| Member | Affiliation |
| Ross Alexander Caird | |
| Jo Gurnell | |
| Gerald Wayne Jackson | |
| Jo Mako | |
| Liam McBride | |
| Mohan Singh |
Hawke's Bay
Flaxmere Licensing Trust| Member | Affiliation |
| Martha Greening | |
| Chrissy Hokianga | |
| Bronwen Hopkins | |
| Warwick Howie | |
| Farley Keenan | |
| Bert Lincoln |
Greater Wellington
'''Rimutaka Licensing Trust '''Canterbury
Cheviot Licensing TrustGeraldine Licensing Trust
| Member | Affiliation |
| Nicky Donkers | |
| Dan Cummings | |
| Jo Hewson | |
| Ross MacLeod | |
| John McGregor Simpson | |
| Rosie Woods |
Otago
Oamaru Licensing TrustClutha Licensing Trust
| Member | Affiliation |
| Steve Morris | |
| Mike Cochrane | |
| Sarah Hayward | |
| Jason Lyders | |
| Jared McPhee |