The history of licensing trusts leads to questions about the importance of communities to us. Will they survive?

There was once a story of the drunk who would roll his way to the voting booth to vote for prohibition. He explained that he supported public ownership of liquor outlets. By voting for prohibition, he opened up the possibility that three years later the vote would be reversed and then they could have  ‘trust control’ – local ownership. Nowadays we do not have that option.

Over a century ago, voters were given the opportunity at general elections to vote for the prohibition of the sales of liquor in a locality. Some areas did and went dry (although there was no restrictions on purchasing elsewhere and bringing the drink into the area). The legislation came from the prohibition movement of the late nineteenth century which was a reaction to the appalling consequences of the heavy drinking at the time. (In 1919 a majority of voters supported prohibition but the numbers were insufficient to pass the 60 percent threshold which would have led to the banning of all liquor sales throughout the nation.)

Instead, a local option was introduced. Some areas voted to go dry, but over time they would reverse their choice. So, for instance, in 1943 the citizens of Invercargill, by 8015 votes to 6542 voted to restore the sale of liquor within the city. By1975 more than 40 communities had gone from dry to wet.

The First Labour Government introduced the possibility of the locals voting for a licensing trust, a community-owned company with (usually) a legislative monopoly to sell liquor. Some 30 areas implemented that option and 18 licensing trusts exist to this day, although generally they do not have a monopoly on sales. About one in five of the population, scattered throughout the country, have local access to one. As well as liquor supply and accommodation some trusts have diversified into supermarkets, property, a housing estate and a hydroelectric power scheme.

The story is well told in A Great Social Experiment: The Story of Licensing Trusts in New Zealand, by Bernard Teahan, who for many years managed the Masterton Trust. As well as providing a brief history of many of the trusts – you are likely to dip into the story of one near your home – the book gives a detailed and interesting account of their overall development .

Why have licensing trusts been so popular? Some argued for them because they provided civilised venues for drinking when the typical private venue was essentially a barn with a concrete floor covered by sawdust. Others argued that they were socially responsible and would not push liquor sales, thereby reducing alcohol abuse. A great attraction was that the trust’s profits were remitted to the community for good works; maybe liquor profits were seen as tainted and this appeased some of the guilt from drinking.

However, there is also a preference for community ownership – a pride in your pub. A licensing trust belongs to the ‘third’ (or community) sector – in contrast to the public sector and the private sector – whose enterprises are seen to be in a special relationship with civil society. It is a sentiment much wider than just for liquor but sometimes it gets ignored by national politicians.

The view is seen most strongly when there is privatisation of a much respected state-owned enterprise. There were sometimes strong economic reasons for opposing some privatisations – notably that the evidence suggests public monopoly is likely to be less economically damaging than a private one – although there can be a case for selling others to the private sector. But for many people sentimental reasons predominate even though they were treated as  irrational by the Rogernomes and other neoliberals.

A democracy has to accept such ‘economic’ irrationality – although it may be simply a different account of the world. The Rogernomes rolled over it; their arrogance is still not forgotten.

Not that they were particularly rational themselves. The uncritical ‘public monopoly bad, private monopoly good’ belongs to the pigs of Animal Farm. That competition always gives better outcomes is contradicted by the evidence too. (Even the recent National Government was backing down over the competitive schooling system. After all, a compelling report of its weakness was only two decades old.)

 Neoliberals characterise people as independent isolated individuals, whereas most of us see ourselves as individuals belonging to communities (including a family). Many of those communities are voluntary, working by consensus and informal rules. However, some communities require formal rules and kinds of compulsion, preferably in a democratic framework. The most obvious is  the state itself; but you probably have a soft spot for your local council – and your licensing trust, if you have one. (And you get bloody cross if Air New Zealand withdraws its service from your local airfield even if the gap is filled by the private sector.)

The Rogernomes kept local authorities, which they saw as means of the state operating at a local level, on a tight leash, minimising the democratic input. Not surprisingly, they had little time for licensing trusts.

So from the late 1980s the trust’s principles began to be compromised. In particular their monopoly on sales were undermined, a story is detailed in Teahan’s book. Many trusts now have to compete against private suppliers. I leave you to set out how competition increases efficiency and improves service. But I caution that it does not always result in these outcomes. (Unfortunately the book provides anecdotal rather than  rigorous evidence as to whether this is true or not.)

The mechanism to introduce competition involves a referendum whose costs are charged to the licensing trust. The private suppliers, who get access to the local market if the referendum leads to competition, pay nothing.

Admittedly, there is provision that  new licensing trusts can be created by the government upon a petition of 15% of the electors in an area; apparently this can happen without any further referendum or input from the remaining 85% of electors. However, no new trusts have been established. It is a pity no one has tried. If they were proposed there would be opposition from a very effective lobby of guess who.

I puzzle over whether this destruction of community institutions is inevitable as we become more individualistic and less community minded. Perhaps we do not. Rather, perhaps the forces of economic development are limiting our ability to live in communities.