Victorian Government Made a Criteria in the 1998 Reforms

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Victorian Government Made a Criteria in the 1998 Reforms Review of 8% limit on liquor licence holdings The purpose of this review is to examine the case for reference group. To gain an accurate understanding of retaining and/or extending legislative limits on holdings how the market for packaged liquor operates, particular by the same or related persons of certain categories of emphasis was placed on discussing the issues in detail liquor licences under the Liquor Control Reform Act with key industry associations and individual 1998. The review was commissioned under terms of businesses. This included meeting with interested reference jointly issued by the Treasurer and the parties, convening a half-day workshop with key Minister for Small Business to examine the socio- stakeholders on the effect of the 8% rule, seeking public economic consequences of legislative limits and develop submissions, and a survey of consumers to establish the a range of reform options. effect of the 8% rule on their purchasing behaviour. Commonly referred to as 'the 8% rule', section 23 of the In accordance with the terms of reference, the Office Liquor Control Reform Act 1998 restricts a person or examined: the costs and benefits of reform, with corporation from holding more than 8% of the total particular regard to the interests of consumers; the number of packaged liquor licences. In effect, only effectiveness of protections of the Trade Practices Act Safeway and Liquorland (the 'major chains') hold a 1974; social welfare considerations; economic and sufficient number of packaged liquor licences to have regional development effects; and employment and their expansion plans directly constrained by the 8% investment impacts. The review was confined to matters rule. No other retailer is likely to be constrained by the relating to the effect of the 8% rule. It was not the 8% rule in the foreseeable future. Governments intent that the review re-examine broader liquor policy settings, such as the removal of the needs At the 1999 election, the Victorian Government made a criteria in the 1998 reforms. commitment to retain the 8% rule on packaged liquor licences, tighten loopholes and extend the provision to The Office would like to thank all those individuals and other licence categories. The basis for this commitment organisations who have contributed to the review. The is the Governments aim to promote the viability of Office also wishes to thank members of the Reference small businesses and to ensure that consumers are able Group for their specialist comments and continuous to access a diverse range of liquor outlets and products. support throughout the review. Previous reviews have cast doubt on the effectiveness of the 8% rule, and a June 1999 assessment by the National Competition Council (NCC) contends that its retention breaches competition policy principles. The Government has indicated that it is willing to consider alternative approaches to the 8% rule that are more effective at meeting the underlying intent of its policy commitment. The Office of Regulation Reform ('the Office1) conducted the review with the advice and guidance of an expert Review of 8% limit on liquor licence holdings 'the Act' or 'new Act' Liquor Control Reform Act 1998. ADF Australian Drug Foundation, an independent, non-profit organisation that provides information/education/practical assistance to the public to reduce the alcohol and drug problems in the community. AHA Australian Hotel & Hospitality Association, Victoria. Director Director of Liquor Licensing Victoria. 'independent liquor store' A liquor store whose core business is the sale of packaged liquor and which is not owned by a major chain. 'independent supermarket' A supermarket that is not owned by a "major supermarket'. Liquorland The packaged liquor sales division of Coles Myer Ltd. It trades under the Liquorland, Liquorland Direct, Vintage Cellars and Quaffers banners. LLV Liquor Licensing Victoria. LSAV Liquor Stores Association of Victoria. 'major chains' Safeways liquor stores (including Dan Murphy) and Coles-Myers Liquorland, Quaffers and Vintage Cellars stores. 'major supermarket' A supermarket owned by Safeway/Woolworths or Coles-Myer. MGAV Master Grocers Association of Victoria. NCC National Competition Council, the Commonwealth Governments advisory body on National Competition Policy issues. 'NCP review' The National Competition Policy review in 1998 of Victoria's Liquor Control Act 1987. 'needs criteria' Until the Liquor Control Reform Act 1998, existing liquor stores could object to an application to open a new liquor store on the grounds that there was insufficient need or demand to justify a new licence. 'the Office' Office of Regulation Reform, Department of State & Regional Development. 'predominant activity' Under the Liquor Control Reform Act 1998, packaged liquor licensees must ensure that the predominant activity of the licensed premises is the sale of packaged liquor. LLV interprets this as being that (at least) half of the licensed premises' turnover comes from packaged liquor sales. Safeway Australian Safeway Stores, the Victorian supermarkets division of Woolworths Ltd. VWIA Victorian Wine Industry Association. '1998 reforms' The reforms to Victorias liquor regulatory framework implemented through the Liquor Control Reform Act 1998 (which came into operation on 17 February 1999). Review of 8% limit on liquor licence holdings Page Foreword i Glossary ii Executive summary iv Chapter 1 The 8% rule and its review 1 Chapter 2 The market for packaged liquor in Victoria 5 Chapter 3 How effective is the 8% rule? 17 Chapter 4 What are the likely socio-economic impacts of the 8% rule? 30 Chapter 5 A way forward 48 Attachments A. List of organisations consulted 53 B. Overview of submissions 54 C. Stakeholder Workshop 56 D. Consumer survey 57 E. Interstate Benchmarking of Regulatory Framework 58 E Terms of Reference 59 G. Checklist of report against terms of reference 60 ill Review of 8% limit on liquor licence holdings Background • undertaking site visits and case studies, covering Ballarat. Castlemaine. Mornington, Warrnambool and The Government supports the development of a viable Melbournes suburbs; small business sector and the promotion of diversity in the packaged liquor market for consumers. To this end, * conducting analysis of current packaged liquor it made a commitment at the 1999 election to retain the licence types from data supplied by Liquor Licensing 8% limit on packaged liquor licence holdings by the Victoria; same or related person under the Liquor Control Reform • reviewing the findings of previous research and Act 1998. reviews, including the 1998 NCP review and the This policy position has been challenged by the NCC's assessment; and National Competition Council, which has recommended * seeking advice from the reviews reference group, that an annual deduction from Victorias National comprised of Government (Treasury & Finance), Competition Policy payments should be incurred if the academia (University of Melbourne) and industry 8% rule is not removed by 31 December 2000. (VECCI). The purpose of this review was to examine the legislative limits on holdings, to further identify its The Victorian market for socio-economic consequences and to develop a range of packaged liquor feasible reform options in the context of the underlying Regardless of any restrictive effect of the 8% rule, intent of the Governments policy commitment. the Office has found that the Victorian market for packaged liquor is intensely competitive and offers Approach consumers a diverse range of shopping experiences The review process was comprehensive and involved: since the changes introduced by the Liquor Control Reform Act 1998. There is no significant barrier to • consulting with 28 major players, such as industry entry for businesses to obtain a packaged liquor and community groups; licence. A comparison of interstate regulatory • calling for submissions, which attracted 16 arrangements of packaged liquor licences revealed submissions from industry bodies and companies that the Victorian regulatory framework is clearly including independently-owned liquor stores; the most progressive in Australia. • convening a workshop with representatives of key interest groups such as the Liquor Stores Association of Victoria, Australian Hotels Association, independent grocers, and the Turning Point Drug and Alcohol Centre; • commissioning a consumer survey of 1,000 liquor purchasers across Victorian geographic areas; IV Review of 8% limit on liquor licence holdings Some key comparisons include: metropolitan and 502 in country areas. • the cost of a Victorian packaged liquor licence is Packaged liquor licensees cover 196 premises operated $500, compared with about $60,000 in New South by the major chains (Safeway, and Liquorland), 34 by Wales. Franklins, 413 independent supermarkets, 421 • Unlike Victoria, three States (Queensland, South independently-owned liquor stores, 106 general stores Australia and Tasmania) prohibit supermarkets from and 121 other businesses such as caravan parks and selling liquor; and vineyards. • Victoria has more liquor stores per capita than New South Wales, South Australia or Western Australia. Safeway (Woolworths) and Liquorland (Coles-Myer) are Consumers the only entities directly constrained by the 8% limit. Safeway has 101 licensed supermarkets and 47 that are A survey conducted during the course of the review unlicensed. Liquorland has 93 outlets, although 53 revealed that consumers have different preferences that Coles supermarkets
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