LIQUOR TRADE ABUSES

Dominion, Volume 39, Issue 27, 26 October 1945, Page 6

LIQUOR TRADE ABUSES

Suggested Remedies Outlined INQUIRY NEARING END “Whether we call it a monopoly, a vested interest or an exclusive right, the facts are that brewers, wholesalers aud publicans share between them the exclusive right of the manufacture and sale of intoxicating liquor in the Dominion, and that their numbers are rigidly fixed,” said Mr. J. D. Willis, counsel assisting the commission, opening his final address before the Royal Commission iu Licensing in Wellington yesterday. Mr. Willis challenged the submission that there was healthy competition in the trade. He condemned what he termed a "very curious and indeed vicious form of competition” and an attempted exclusion which existed. In no other trade did manufacturers tie up retail outlets to see that the public consumed their particular products to the exclusion of rivals. After reviewing considerable evidence on goodwill and premium payments and rentals for licensed hotels, Mr. Willis submitted that those premises could well be described as “pawns for speculation.” Auckland evidence, said Mr. Willis, was that the price of beer to the hotelkeeper was 5/2 a gallon. New Zealand Breweries gave the price as 5/3.6, and it might be that that was the average over the whole Dominion, including freight. On the basis of a cost of 5/2 a gallon, percentages of profit, varying according to the size of glass used, were as follows:—l2oz., 50 per cent.; 10oz., 80 per cent.; Boz., 125 per cent.; 70z., 148 per cent.; 50z., 261 per cent. If a publican sold an Boz. glass in the lounge for 1/- his percentage of profit was 3255 per cent. These were the arithmetical results; the actual results would depend on a number of factors, such as whether the glasses were filled exactly, were overfilled to make up for overflow, or under-filled to make extra profits. The commission had been told that 12 oz. handles had to be made available “on request” in the four main centres, and that the lOoz. handle was also largely used. In the country district the Boz. measure is apparently more usual. Seven ounce was the measure frequently used in the lounges, and soz. was the “pony.” On bottled beer, sold in soz. glasses, the profit was 140 per cent, and on riggers of beer 74 per cent. Stock sheets of various companies had been placed before the commission in Auckland, and an analysis showed that for the brief period covered the average percentage gross profit on cost in all hotels was as follows: —Dominion Breweries, 56 per cent.; Campbell and Ehrenfried, Ltd., 52.5 per cent.; N.Z. Breweries, Ltd., 54.1 per cent.: Hancock and Co., Ltd., 69 per cent. The lounge bar in the Hotel Auckland showed percentages each week as follows: 169.4; 172.5; 168.2; and 170.3. Alternatives Examined. Mr. Willis went on to review suggested remedies for present conditions in the liquor trade. Since the method of control at present in force was the creation of a restricted monopoly, the possible remedy which logically , fell for examination first was abandonment of the system of licensing, leaving it free to anyone who wished to do so to sell liquor. The chief objection was that free competition might lead to practices resulting in an injurious increase in the total sales of intoxicating liquor. The second suggested remedy was ownership by State or public CorporationAdvantages urged were: Abolition of the profit motive; elimination of goodwills; tightening of controls; diversion of profits to provide social and other amenities. Two difficulties that had been suggested related to the amount of money involved in taking over the trade, and suggested difficulties of management. ‘As to the money required,” said Mr. Willis, “I presume that if Government decided to take over the trade, it would simply cancel all existing licences, set un a department of public corporation to conduct the trade, and that that body would then proceed to negotiate the purchase of such hotel and other properties if required, paying only the market value of what it bought, namely, the land and buildings, and not the licences.” “As the question of State ownership has been an issue in the licensing polls for some years now, the commission may, prefer to leave this issue to the people, said Mr. Willis. “But if it does. I suggest that it considers two further matters : The preparation of a clear-cut scheme for giving effect to State ownership. such scheme to be explained to the public before the next poll so that they know precisely what they are voting for or against. The elimination of the present somewhat undemocratic three-issues. ballot paper (undemocratic because it is all ‘in favour of the trade) and the substitution of two ballot papers, or two sections of the one paper, requiring electors to vote whether they favour continuance or prohibition, and, if continuance is carried, whether they favour continuance under private enterprise or State ownership. The third suggested remedy was tor local trusts or municipal ownership. For Mr. Cooke (one of trade counsel) to say, ns he had. that the Carlisle system has liven “damned with faint praise” -by the English commission was not only unfair, it was incorrect, said Mr. WillisInvercargill Experiment,

Discussing the Invercargill experiment, he said that the only way for the commission to ascertain the views of the local residents was to have regard to evidence officially tendered before it on oath. Alembers of the nublic had come forward voluntarily to speak about the system. The New Zealand Alliance had called local witnesses to speak about it. But the trade had not condescended to call a single witness at Invercargill or elsewhere. There was not a single unqunli-, tied condemnation of the system except by a local fruiterer, an ex-pttblican, who was, in fact, a prejudiced witness. The fourth suggested remedy was to preserve more or less the existing system, giving licensing committees increased powers. On this subject Mr. Willis said that a volume of evidence suggested that some central authority was necessary for many reasons, and it might be thought that such a body would be sufficient in itself, as in Queensland. Licensing magistrates ihight be substituted for licensing committees, but a coordinating authority was still necessary. Central Board. Another suggested remedy was to establish a central board of control, using the Queensland system as a basis — to effect a redistribution of licences, to supervise the conduct and management of hotels, with particular regard to accommodation. generally to supervise liquor laws. It seemed to be agreed, said Air. Willis, that an equitable redistribution of licences was called for in the interests of the travelling public. Two matters in particular had to be considered—the right of inhabitants of a particular locality to object to having licences transferred to (hat locality against their wishes, aud the compensation to be paid for licences cancelled and then removed.

The monopoly allegation. increased licensing hours, accommodation, and beer strength were dealt with by counsel tor the licensed trade. Mr. IL F. O'Leary, K.C., before tile commission on Wednesday.

Supporting Hie sale of liquor by grocers and wholesalers, Air. O’Leary said that thousands of people preferred to buy their liquor in this way and have it delivered to their homes. The objection of the alliance was another attempt at repression. Separate licences to breweries to brew and to sell would be absurd. One would bo no use without the other. Proceeding. Air. O’Leary said the, real fear produced by the three-year polls was the reason why. better hotels bad not been built. Generally. New Zealand had accommodation quite satisfactory to the average traveller and any dissatisfaction was from Americans and the more well-to-do British tourists. Much criticism might be due to over-fastidiousness. Mr. O’Leary submitted that the monopoly hogy had been laid: the use of the word was a misleading misnomer. _ In the lasi 20 years :i prosperous brewing and lintel-owning company. Dominioii Breweries, li,’id come into being and challenged (lie prosperity of New Zealand Breweries, forcing it to enter the hotel business

ensure an adequate outlet for its products. That did not indicate a monopoly. The trade was definitely competitive. Nine brewers’ licences were held by New Zealand Breweries and 33 by other brewers; obviously there was competition. Hotel-owning companies and breweries did not receive huge premiums or goodwill payments. These went to private owners or to lessees who sold the balance of « lease. Weekly rents paid to breweries and companies were on a fair basin. The trade contention on beer strength was that the graduated tax. operating before a wartime regulation fixed the strength, and which increased with the gravity, was sufficient deterrent aguinnt the brewing of heavy beer. The trade aud the public would welcome a return to pre-war strength.