April 2024
Executive Summary
The Restaurant Association supports the rationale used to determine the weighted fee increases in the Kāpiti Coast District Council’s proposed Alcohol Licensing Fees Bylaw, and commends the Council on taking a risk-based approach to setting alcohol licensing fees.
Despite this, we submit that the risk weighting used to determine a premises’ cost/risk rating does not reflect that rationale. Currently, the types of premises with an on-licence are weighted against other on-licence venues. The Restaurant Association believes that risk weightings should instead be set against the relative level of risk across all licence types. The Restaurant Association recognises that the setting of cost/risk ratings is not within the control of the Kāpiti Coast District Council, and as such makes the following recommendations:
- Recommendation 1: That the council should take a more gradual approach to fee increases, spreading the cumulative increase over the full five years instead of such a large increase as proposed in year one.
- Recommendation 2: That the Kāpiti Coast District Council advocates to the Ministry of Justice for a review of the cost/risk ratings for different types of premises set by the Sale and Supply of Alcohol (Fees Regulations) to better reflect the risks of on-licence premises as compared to off-licence and club licence premises.
Introduction
The Restaurant Association of New Zealand (the Restaurant Association) welcomes the opportunity to make a submission on the Kāpiti Coast District Council’s proposed Alcohol Licensing Fees Bylaw.
We support the rationale used to determine the weighted fee increases in the proposed Bylaw, and commend the Council on taking a risk-based approach to setting alcohol licensing fees.
Our more than 2,500-strong membership is made up of hospitality businesses where food is the hero of their operations, with alcoholic beverages offered as a supplement to their culinary experience. It is clear that sale of alcohol alongside a meal carries far less risk than businesses where the sale of alcohol is their core offering.
We recognise the need to ensure the sale, supply and consumption of alcohol is undertaken safely and responsibly, but believe that the greatest risk to this goal is the off-licence sale of alcohol.
Fee increases proportionate to risk of harm
The Restaurant Association supports the premise that the greatest fee increases should apply to the higher risk categories of the premises, which allows for a lower increase for smaller operators and/or operators in low-risk environments.
Whilst we recognise the need to increase licence application fees, annual licensing fees, and special licence application fees to better recover the cost associated with administering both new and existing licences, it is imperative these increases reflect the actual levels of harm caused.
The proposal that the fee increases would mainly affect medium to high-risk premises like pubs and chain stores or supermarkets, not small daytime cafes, or intimate high-end restaurants is essential to ensuring the actual levels of harm caused is reflected in the fee increases.
This is especially important for small business owners across our sector who have been overloaded with the responsibilities of adapting their businesses to abide by new and changing regulations, when their focus should be on their recovery from almost three years of hampered trading to ensure their business is rebuilt in a more resilient and sustainable way.
It is important to recognise, however, that the food and beverage sector of the hospitality industry operates on a very tight profit margin of approximately 4%.
Expenditure on hospitality is also highly dependent on local and tourism spending, with both of these spends being highly unstable. Local spend is highly discretionary, meaning it is the first to be cut from household budgets in times of economic downturn.
Given the unprecedented levels of disruption to our industry over the past four years—from the global pandemic and its flow-on effects, to the repeated extreme weather events and the cost of living crisis, we recommend that the council should take a more gradual approach to fee increases, spreading the cumulative increase over the full five years instead of such a large increase as proposed in year one. Our proposed alternative models for application fees and annual licensing fees are at appendix 3 and 4.
- Recommendation 1: That the council should take a more gradual approach to fee increases, spreading the cumulative increase over the full five years instead of such a large increase as proposed in year one.
Review of current risk ranking
While the Restaurant Association recognises that the proposed fee structure must be set in accordance with the framework set out by the Sale and Supply of Alcohol Act 2012, the Local Government Act 2002 and any regulations, we believe there should be a review of the current risk ranking.
In a practical sense, there are far fewer restrictions and regulations for off-licence holders in terms of the responsible sale and supply of alcohol when compared to on-licence holders.
For example, when serving alcohol in an on-licence venue, staff are bound by host responsibility requirements and must monitor intake to determine when they must stop service to prevent intoxication.
Alternatively at an off-licence venue, customers can purchase as much alcohol as they want, to take home and then consume as much as they want without any restriction. There are minimal requirements for an off-licence premises to ensure they are selling and supplying alcohol in line with the objectives of the Act, and this should be better reflected in the licensing fees framework.
We submit that:
- An on-licence Class 1 restaurant carries an equivalent risk of harm to an off-licence hotel or tavern.
- An on-licence Class 2 restaurant carries an equivalent risk of harm to an off-licence Class 1, 2 or 3 club, remote sale premises, other, and
- An on-licence Class 3 restaurant carries an equivalent risk of harm to an on-licence BYO restaurant, theatres, cinemas, winery cellar doors.
We therefore believe that a more fulsome review of the cost/risk rating of premises within the regulations to better reflect the actual risk of harm. The Restaurant Association’s proposed cost/risk rating table is available at appendix 2.
We recognise that the setting of cost/risk ratings is not within the control of the Kāpiti Coast District Council, and therefore recommend that the Kāpiti Coast District Council advocates to the Ministry of Justice for a review of the cost/risk ratings for different types of premises set by the Sale and Supply of Alcohol (Fees Regulations) to better reflect the risks of on-licence premises as compared to off-licence and club licence premises.
- Recommendation 2: That the Kāpiti Coast District Council advocates to the Ministry of Justice for a review of the cost/risk ratings for different types of premises set by the Sale and Supply of Alcohol (Fees Regulations) to better reflect the risks of on-licence premises as compared to off-licence and club licence premises.
Appendices
Appendix 1: current cost/risk rating table
| Licence type | Type of premises | Weighting |
| On-licence | Class 1 restaurant, night club, tavern, adult premises | 15 |
| Class 2 restaurant, hotel, function centre | 10 | |
| Class 3 restaurant, other | 5 | |
| BYO restaurant, theatres, cinemas, winery cellar doors | 2 | |
| Off-licence | Supermarket, grocery store, bottle store | 15 |
| Hotel, tavern | 10 | |
| Class 1, 2 or 3 club, remote sale premises, other | 5 | |
| Winery cellar doors | 2 | |
| Club licence | Class 1 club | 10 |
| Class 2 club | 5 | |
| Class 3 club | 2 |
Appendix 2: proposed cost/risk rating table
| Licence type | Type of premises Weighting | ||
| 15 10 | 5 | 2 | |
| On-licence | Night club, tavern, adult premises x | ||
| Class 1 restaurant x | |||
| Class 2 restaurant, hotel, function centre | x | ||
| Class 3 restaurant (other), BYO restaurant, theatres, cinemas, winery cellar doors | x | ||
| Off-licence Club licence | Supermarket, grocery store, bottle store x | ||
| Hotel, tavern x Class 1, 2 or 3 club, remote sale premises, other Winery cellar doors Class 1 club x | x | x | |
| Class 2 club | x | ||
| Class 3 club | x | ||
Appendix 3: proposed alternative staged fee increases for application fees
| Current fee | Year 1 | Year 2 Year 3 | Year 4 | Year 5 | |||||||||||
| $ incr. | % incr. | New fee | $ incr. | % incr. | New fee $ incr.% incr. | New fee | $ incr. | % incr. | New fee | $ incr. | % incr. | New fee | Total incr. | ||
| Very low | 368.00 | 27.00 | 7.3 | 395.00 | 28.00 | 7.1 | 423.00 29.00 6.9 | 452.00 | 29.00 | 6.4 | 481.00 | 29.00 | 6 | 510.00 | 142.00 |
| Low | 609.50 | 45.00 | 7.4 | 654.50 | 46.00 | 7 | 700.50 47.00 6.7 | 747.50 | 48.00 | 6.4 | 795.50 | 49.00 | 6.2 | 845.00 | 235.50 |
| Medium | 816.50 | 150.50 | 18.4 | 967.00 | 160.00 | 16.6 | 1,127.00 170.00 15 | 1,297.00 | 180.00 | 13.9 | 1,477.00 | 190.00 | 12.9 | 1,667.00 | 850.50 |
| High | 1,023.50 | 211.00 | 20.6 | 1,234.50 | 212.00 | 17.2 | 1,446.50 213.00 17.7 | 1,659.50 | 214.00 | 12.9 | 1,837.50 | 216.00 | 11.5 | 2,089.50 | 1,066.00 |
| Very high | 1,207.50 | 250.00 | 20.7 | 1,457.50 | 252.00 | 17.3 | 1,709.50 252.00 14.7 | 1,961.50 | 252.00 | 12.9 | 2,213.50 | 252.00 | 11.4 | 2,465.50 | 1,258.00 |
Appendix 4: proposed alternative staged fee increases for annual licensing fees
| Current fee | Year 1 | Year 2 Year 3 | Year 4 | Year 5 | |||||||||||
| $ incr. | % incr. | New fee | $ incr. | % incr. | New fee $ incr.% incr. | New fee | $ incr. | % incr. | New fee | $ incr. | % incr. | New fee | Total incr. | ||
| Very low | 161.00 | 14.00 | 8.7 | 175.00 | 14.00 | 8 | 189.00 14.00 7.4 | 203.00 | 15.00 | 7.4 | 218.00 | 16.00 | 7.3 | 234.00 | 73.00 |
| Low | 391.00 | 35.00 | 9 | 426.00 | 35.00 | 8.2 | 461.00 35.00 7.6 | 496.00 | 36.00 | 7.3 | 532.00 | 37.00 | 7 | 569.00 | 178.00 |
| Medium | 632.00 | 118.00 | 18.7 | 750.00 | 118.00 | 15.7 | 868.00 118.00 13.6 | 986.00 | 118.00 | 12 | 1,104.00 | 119.50 | 10.8 | 1,223.50 | 591.50 |
| High | 1,035.00 | 193.00 | 18.7 | 1,228.00 | 193.00 | 15.7 | 1,421.00 194.00 13.7 | 1,615.00 | 194.00 | 12 | 1,809.00 | 195.00 | 10.8 | 2,004.00 | 969.00 |
| Very high | 1,437.50 | 267.00 | 18.6 | 1,704.50 | 268.00 | 15.7 | 1,972.50 270.00 13.7 | 2,242.50 | 270.00 | 12 | 2,512.50 | 270.50 | 10.8 | 2,783.00 | 1,345.50 |
Note: the highlighted figures in appendices 3 and 4 do not reflect the figures provided in the proposal document, which appear to be calculation errors.