Drink Tank

Keep Sydney safe: Open for business

The current review of New South Wales liquor law reforms, introduced in February 2014, has generated heated debate, and a good deal of misinformation.

In the weeks ahead Drink Tank will highlight a number of key submissions to the Independent Review, separate the fact from the fiction and make the case in support of the measures.

Today, FARE’s Anthony Harrison puts a number of questionable industry claims under the microscope.

Police, paramedics, nurses, doctors and public health professionals have pitted their experience of a reduction in alcohol-related harm in the Sydney CBD Entertainment Precinct against industry interests and revellers unhappy with the restriction these measures have placed on their ability to party into the early hours of the morning.

That alcohol-related assaults have fallen cannot be disputed, but it appears that some are concerned that the prevented harm doesn’t warrant the impact they’ve seen on the night-time economy. So what does the evidence really show?

While the figure has varied by source, and naturally enough also changed over time, many publicised claims have the number of business closures in Kings Cross sitting at around 40. To deny that any of these businesses might have closed due to the new regulations would be wrong. But it’s important to acknowledge the misleading nature of some of these claims, and view the transformation that’s being observed in its long-term context, and in light of the harm-reduction it has delivered.

Surely Not blogger, the recently unmasked Chris Sinclair (former Events Manager for model Sarah Budge’s Kings Cross venue Crane Bar), whose passion on the topic extends to comparing a concerned residents’ group with ‘death cult’ terrorist organisation ISIS, recently provided a list of businesses whose closure he attributes to the new regulations.

The Goodgod Small Club made the list, despite the owners explicitly stating that the closure was not related to the new regulations. A McDonalds restaurant on George and Bridge Street was also included, despite McDonalds executives suggesting that the move was part of a ‘strategic repositioning’ in light of competition with other food retailers. Many of those listed were contained at single locations, such as six venues in the Exchange Hotel and two venues contained in Hugos Lounge.

The closure of Soho nightclub was also among those attributed to the lockout laws, despite the owner describing a “massive backlash” to his son’s conviction of rape on the premises (for which a retrial has now been ordered) in the preceding months. The Piano Room made the list despite closing several years prior to the lockout laws. Well-known venue, The Village, also made the list. However, New South Wales Police had specifically advised the City of Sydney to reject an application for extended trading hours from The Village due to, among other things, 70 police events including attempted murder, assault, drugs, stealing, malicious damage, domestic incidents and street offences. It’s worth noting that, despite this, the venue never appeared on the violent venues or three strikes registers.

The possibility that Taylor Square Newsagency, another business to make Sinclair’s list, may have closed due to changes in the way that people consume media, rather than reduced foot-traffic in the early hours of the morning, also seemed lost on Sinclair.

To take this list at face value, however, we might consider the available evidence for how many business closures may be expected in the absence of lockouts. Many of the businesses reported to have closed following the introduction of new measures were small businesses. Unfortunately, the survival rate of small businesses is relatively low. In the 12 months to June 2015, 8.6 per cent of small businesses (employing between one and 19 employees) exited the market across New South Wales. Of the 1,244 small businesses registered in the Darlinghurst and Potts Point-Woolloomooloo regions as of June 2014, this would equate to 100 exiting by June 2015. Considerably more than the 40 that have been identified, and for a great variety of reasons. Fortunately, the entry rate of new businesses is just as high. No surprise then that a local residents’ association has counted 70 new businesses in the area, including antiques dealers, ice-cream vendors, chemists, restaurants, hairdressers and yoga studios, as well as a number of new bars.

That isn’t to detract from the hardship experienced by employees displaced by business closures. However, the good news for hospitality workers is that New South Wales is experiencing a period of relative strength, with the lowest rate of seasonally-adjusted unemployment in Australia (5.3 per cent) in February 2016. In the two years to June 2015, there was a marked increase in the number of Accommodation & Food Service businesses (which includes pubs, bars and nightclubs) in both Darlinghurst (10.8 per cent) and Potts Point, Woolloomooloo (7.7 per cent). Strength in the industry was also reflected in Accommodation & Food Services employment across the state, with 8.4 per cent growth contributing an additional 21,000 jobs in the 12 months following reform of liquor regulation.

More good news. Industry sources are reporting that CBD Entertainment Precinct businesses have been successful in moving away from reliance on late-night alcohol sales to more diverse business models including food offerings. Many new businesses have sprung up to cash in on diversification of the region too.

And live music? While it’s difficult to identify the cause, the industry does appear to have experienced some challenges in recent years. It was heavily publicised that the Live Music Office reported a 40 per cent reduction in the value of door charge receipts and 19 per cent reduction in attendance across the CBD Entertainment Precinct in the two years to February 2015. This equates to average annual decreases of 20 and 9.5 per cent respectively. While these data have been conveyed as representing an adverse effect of liquor regulation, in fact such volatility pre-dated the measures. Live Performance Australia (which admittedly encompasses more than just music, but it does represent the majority of attendance and revenue) reported a New South Wales-wide 14.9 per cent reduction in revenue and 8.5 per cent reduction in attendance in 12 months to June 2012. Such volatility has also affected Western Australia, where lockout legislation is not in place, with live music venue closures being described as an “emergency situation”.

However, some evidence suggests that the tide might be turning for creative arts in New South Wales. Decline among the count of Creative Artists, Musicians, Writers and Performers businesses has slowed from 6.7 per cent in 2012-13 to 2.1 per cent in 2014-15.  The number of Performing Arts Operation businesses in New South Wales, which declined by 9.1 per cent in 2012-13, recorded growth of 5.4 per cent in 2014-15.

We all value a vibrant live music industry, but blaming a restriction on entry to premises after 1:30am for the difficulties it has faced doesn’t provide the full picture.

Returning to the original question: to what extent does the reduction in alcohol-related harm justify the impact that new regulations have had on the night-time economy?

When considering the misleading claims by vested industry groups about the magnitude of closures, the natural dynamism of businesses entering and exiting the market, and the successful diversification of business in an economic climate receptive to such changes, it’s difficult to see this as compelling evidence of an adverse impact.

On the contrary, while acknowledging that the regulations have helped to catalyse change in the area, it is obvious that a positive change has been achieved, not just as a result of the dramatic decline in alcohol-related assaults and associated hospitalisations, but in the creation of a vibrant local economy, supported by a diverse range of business opportunities and a safe environment for revellers, tourists and residents.


Anthony Harrison

Anthony is a Senior Policy Officer at the Foundation for Alcohol Research and Education. He has degrees in science and economics from the ANU, and is currently undertaking graduate study in psychology. Anthony previously worked in economic research in the Commonwealth Government. He is passionate about the benefits of preventive health measures, with particular interest in the taxation, marketing and availability of alcohol. When not at work or study, Anthony enjoys music festivals, reading and travel.


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