DRINK TRADE POLICY.

Otago Daily Times, Issue 19019, 15 November 1923, Page 11

DRINK TRADE POLICY.

CORPORATE CONTROL SCHEME. COMPARISON WITH STATE OWNERSHIP. POSITION OF THE RETAILER. (From Our Own Correspondent,) LONDON, October 5. More than a colutnn is devoted in the Observer to a discussion on the scheme ot “corporate control” of the drink trade in New Zealand. The statement made by the promoters of the scheme, the writer of the article declares, is frank in its lull admission of the evils which are inseparable from private interest in the sale of alcoholic beverages, and in its recognition o the fact —not always recognised by reformers—that these evils tend to become aggravated by the sense of insecurity which is induced by persistent challenge of existing arrangements and by an insistent and growing demand for improvement, suppression, or change. In New Zealand the most clamant demand has been for complete prohibition. The strength of the demand has probably been overestimated, tbe practicability of suppression, if earned, is at least doubtful; but the remains that prohibition in New Zealand is a possible contingency with a statutory sanction behind it, and this fact imports an element ef precariousnCss into the . trader s prospects which is not without its effect upon his trade practices. The effect is not, in (he main, a wholesome one. Ihe shadow of a threatened outlawry does not always—perhaps not. often —lead to amendment. Jn the case of the liquor trade worldwide experience appears to suggest that it stimulates resort to malpractices and accentuates evils which are not easily separable from private interest in liquor profits, lo this extent it is possible to agree with the incidental pleas of the promoters: of the new scheme. ■ Their main plea that “corporate control” would in actual effect secure the advantages of direct Stale control is much more questionable. What are tne distinctive merits of State purchase and directcontrol? They are in brief these; (1) An immediate and complete elimination of private interest in the sale of alcoholic liquors, with a consequential restoration of full and unfettered public control over licensing airnneements; (2) an equitable and definitive settlement of the claims of expropriated interests, Which would facilitate immediate reforms; and (3) unobstructed powers c-f experiment, which wo-uld respond to varying conditions and needs and determine arrangements ih accordance with public demand and interests. PRIVATE INTEREST. To what extent does the proposed scheme of “corporate control” secure these advantages? In the first plate, it clearly does not eliminate private interest in the sale of liquor. It certainly restricts it (within fairly generous limits) and subjects it to a system of co-ordinated control; but it does not eliminate it, nor, if wo except a provision for contingent prohibition ot the trade by a popular vote nine years alter the inauguration of “Corporate Control, does it offer any promise of ultimate elimination. A continuing, although fixed, private interest in drinX profits is an integral part of the scheme. This is true of the wholesale side of the trade. W bat of the retailer? His 'position in the scheme is less clearly defined. His premises, as licensed property, would vest in the corporation, and ho himself, in addition to being subject to the supervision and control of the corporation, would be dependent upon it both for his authority to sell and lor his supplies. Whether subject to this measure of control he is to be allowed to retail for his own profit does not appear. If he is lo be so allowed the inducements of private interest would remain. Public ownership and public control both find a limited place in the scheme, but it is not a commanding place. Thus, While 20 per cent, of the share capital of the corporation is to be allotted to the Government (the remaining 80 per cent, being held by the vendors), the allotment will not be effective (i.e., will not represent absolute Government property) until the allotted shares have been paid for out of the accumulated dividends earned on them. During a period of years that is at present indeterminable, since it is dependent on returns in profit, the vendors would in reality own the whole of (he financial interest in the trade done and they would continue to hold not less than 80 per cent, of it thereafter. That is an arrangement far removed from State ownership and control. “ PRACTICAL AND EXPERIENCED MEN.” It will be said that the continuance of financial interest in Sales would not prejudice control, because live of the nine members ot the board which is to have “sole direction” of the scheme are to be nominees of the Government. Is this a sure and effective guarantee of the methods and spirit of tne proposed control and a lull Safeguard for public interests? That it is sincerely intended to be may be assumed without reserve. We are loss sure of the eventual fact. Tho whole of the nine members of the board which is to b(» in fettered control of the scheme are to be '‘practical and experienced men.” The kind of experience is not stated, but it is a reasonable presumption that it implies practical knowledge ot the management of the liquor trade. If this be so. it Would seem to follow from the structure of the scheme that, they will ail be shareholders in the corporation—i.e., raefl with proprietary interests in its operations, in any case, even if the words “practical and experienced men” are meant to carry a wider meaning and to cover other forms of business experience, it is certain that one-half of the ordinary members of the board (i.e.. the four nominees of tho vendors) will he men with a direct proprietary interest in iho capital of iho corporation. Does such an arrangement safeguard public interests as fully and as completely as a Scheme of State purchase and control? Is it in a strict sense public control at all? ft is one thing to associate with a statutory authority men of wide and practical knowledge of the industry to bo controlled, whose nersonal financial interests are iict involved in the commercial results of he scheme. That is plain business sense. The value of such an arrangement was proved in this country during the war in connection with experiments in direct management of the trade made by the Central (Liquor Traffic) Board of Control. It is in evidence still in a loss direct way in connection with a few State-controlled undertakings. It is quite another Ihing, however. ’to transfer “sole direction” cf the liquor trade in a country to a small board composed wholly, or in large part, of men with private proprietary interests in the industry to be controlled. It cannot pisllv be said cf such an arrangement that it “would actually mean public, or State, control.” EXCLUSION OF LOCAL CONTROL. Further, except for a provision which would empower the corporation to set up district licensing boards (on which the licensees would have direct, Representation) to deal with tbe issue and continuance of permits to sell, the proposed scheme is one of centralised authority and power. It gives no play io local initialive, nor docs it confer any powers of local experiment, in a word, it ignores the principle of local control and assumes a dominion-wide uniformitv of conditions and needs. It may be said that tho present law does the enme. That, in our view, is its real defect, The greatest mistake that the reform movement in Mew Zealand made was to surrender (ho principal of local selfdetermination in an over-sanguine hope of achieving a short cut to national prohibition. That, mistake has since been repeated in some of the Australian States, although no always with the asSeut of far-sighted loaders of the temperance movement. In one or two cases it was due to successful trade tactics. The old local Option law of Now Zfialartd was defective. As is tlio case with the Scottish Act, it authorised only a partial application of the principle of selfdetermination. It sought to suppress, but gave no power to reorganise or to econstruct. It nevertheless did, within unduly restricted limits, recognise the principle of local determination and local control. The new scheme of “Corporate Control” does not. It is no defence of (ho omission that the scheme accepts and follows the line of the exiting statute. New policies justify themselves by their promise of advance. You do not remedy a defect by repeating it. It will be nlaip from these observations that the proposed scheme of “Corporate Control” differs, in material fthd _ even fundamental respects, from the policy of State purchase and direct control which it is designed to ease that circumstances in Now Zealand require a modification of tho earlier pro-

posal of State purchase and control. The sweep and scope of that policy may be too great for immediate advance : but it is possible to modify a policy without departing from its central and fundamental principle, and to give powers of local experiment which admit of progressive advance. The new scheme pays homage to experience, but it does so in an indirect and hazardous way.