A recent ODT editorial (19.3.26) leans heavily on a $9.1billion estimate of the costs of alcohol-related harm to argue against my changes to alcohol laws.
The problem is that the editorial lifts this figure from the Regulatory Impact Statement for the Sale and Supply of Alcohol (Improving Alcohol Regulation) Amendment Bill, and uses it without understanding where it comes from or how it should be applied.
That number, produced in a report by the New Zealand Institute of Economic Research, is worth examining properly.
It is a gross cost study. It tallies harms, but deliberately excludes benefits, including the economic activity, employment and the value to consumers.
That doesn’t make it a bad report. In fact, it’s more thorough than many similar attempts to quantify alcohol harm.
But it does mean the figure cannot be used, on its own, to justify stricter regulation. It tells us nothing about net costs and nothing about which policies work.
The $9.1b figure is also heavily driven by a single factor, fetal alcohol spectrum disorder (FASD) accounting for $4.8b of the total.
FASD is a serious issue, and one the government is taking seriously, including by directing more of the alcohol levy towards identifying cost-effective interventions to reduce it.
But it is difficult to see how any of the changes, whether on licensing processes, objections, or minor compliance rules, would have any meaningful impact on FASD at all.
Take the objections process as an example.
The editorial calls changes restricting licence objections to those in the local community ‘‘petty and short-sighted’’, suggesting that anyone should be able to object to a liquor licence from anywhere.
I have spoken to business owners in Auckland dealing with objections from as far away as Invercargill, some even from overseas. The personal and economic toll of this uncertainty is immense.
It costs nothing to object, but defending a licensing application can cost tens of thousands of dollars.
One venue I spoke to spent $45,000 preparing to defend its application, only for the objector to not even bother showing up to the hearing.
Objection processes exist to give affected communities a voice because they live there and cannot simply leave.
An out-of-town objector always has a choice the local resident does not: they can decide not to visit or move there. That is the difference.
Requiring a direct connection to the community reflects a basic principle. Those who must live with a decision should have standing to contest it, and those who don't should not be able to impose their preferences on communities from a distance.
Local residents retain full ability to object, and national organisations can continue to support locals who wish to engage. The process simply reflects who is actually affected.
Yet the editorial makes no attempt to show how allowing objections from anyone, anywhere would meaningfully reduce harm.
That points to a broader problem with the editorial’s argument. A large harm estimate does not tell us whether a particular reform is good or bad, which policies work in reducing harm, or whether removing outdated or irrelevant rules will increase harm.
What matters is cost-effectiveness. If a harm-reducing policy makes sense, it does so no matter what the total cost of alcohol harm is.
That is the standard we should apply.
Consider how we approach other areas of policy. The Ministry of Transport estimates the social cost of car crashes at $11.93b. No-one would argue that this figure alone justifies sweeping restrictions on people’s ability to drive.
Instead, we use it to assess whether specific interventions are cost-effective: e.g. comparing the cost of straightening a dangerous curve with the benefits of lives saved and crashes avoided.
If spending $1million on median barriers reduces the social cost of crashes by $3m, that investment makes sense — regardless of whether the total cost of crashes is $12b or $2b.
Alcohol regulation should be no different.
We should focus on what works with cost-effective interventions that reduce the most serious harms, like FASD.
There is also a practical reality often ignored in these debates. Hospitality venues are controlled environments with trained staff, legal obligations and the ability to refuse service.
The alternative to licensed premises is flat parties where attendees are largely unsupervised, unrestricted and things are far more likely to spiral out of control.
If we are serious about reducing alcohol-related harm, we should not be making it harder for responsible, regulated venues to operate. We should be recognising the role they play in providing safer environments for those who choose to drink.
We also need strong enforcement of existing laws that target irresponsible supply, and the behaviours that come with irresponsible consumption. After all, the vast majority of people who choose to consume alcohol do so safely.
At the same time, we should not be afraid to remove rules that are complex, inconsistent and disconnected from harm.
Not every regulation reduces harm. And not every simplification increases it.
New Zealanders deserve policy grounded in evidence, not in headline figures taken out of context.
- Nicole McKee is an Act New Zealand MP, Associate Minister of Justice, and sponsor of the Sale and Supply of Alcohol (Improving Alcohol Regulation) Amendment Bill.
