09/07/2009 - 00:00

Spurious claims little more than whining

09/07/2009 - 00:00

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Booze business shows the hypocrisy of regulations used to curtail competition.

Spurious claims little more than whining

TWO weeks ago, I delved into the subject of red tape and over-regulation that many businesses complain of.

I mentioned that I thought too often this issue concentrated on consumer friendly areas such as retail shopping hours and liquor licensing, rather than the huge amounts of paperwork, compliance and barriers to entry that exist in many other industries that don't directly affect the public.

Having dismissed shopping hours and liquor, I found myself going over that same subject matter - noting that although the big players are pushing for deregulation in trading times, I recalled them being avid users of the liquor licensing regime to thwart competition.

With that in mind, I couldn't help trawling through decisions by the liquor licensing director to see if the big players featured there recently.

It didn't take long for one conditional liquor store licence to take my interest, though I have to admit there was not sight nor sound of one of the majors in this matter.

The name that jumped out at me - The Wine Box - is the same name as a liquor store near my house, though the application was for another location, on Stirling Highway in Nedlands.

A little investigation revealed the same people own both establishments - the existing store and the new one are each essentially part of an IGA supermarket. That, in itself, is part of the irony of this story, because IGA is the main network fighting against deregulation of shopping hours.

The really interesting part of the director's decision was the discussion about objections. One objector was a local resident; but it was the other that interested me.

It came from an existing liquor store in Claremont, a Liquor Barons, which took a tack that surprised me.

According to the copy of the decision I obtained, the objection was lodged on the basis that the Wine Box's liquor licence may disturb, annoy or offend local residents and that the granting of a liquor licence would not be in the public interest.

The objection also said it could cause harm or ill-health due to the use of liquor.

This is a liquor store basically saying that liquor stores have the potential to disturb the locals and actively sell a product that might harm people. From an industry perspective, that really does seem to be shooting yourself in the foot.

It's like me complaining about the opening of new newspaper because everyone knows how notoriously inaccurate journalists are, and that creating more newsprint is simply environmental vandalism.

Of course, the print media isn't regulated like that and there's not a mechanism for existing players to object to potential competitors.

Reading the detail of the objection it becomes clear, if it wasn't already, that it really is all about avoiding competition.

To a degree, that is understandable. Most business people would use any legal processes, if they were available, to keep competition at bay.

There are some that go further and use illegal strategies to keep rivals away, but that is another story.

In this case, the objector may have been put through the rings themselves in the past. Who knows?

The fact is that any rules that unnecessarily hinder or prevent new business from entering a legitimate industry ought to be removed.

Liquor is only licensed because it can be dangerous in some circumstances. Nevertheless, it is legal to sell it, it is part of our community and many businesses make a lot of money from it.

It should not be up to competitors to shut out new rivals by throwing up what appear to be spurious arguments.

Gas obligations

LAST week we had a story on the mooted development of the Browse Basin gas field off the Kimberley coast.

There is a lot of conjecture around this proposal. As I understand it, the partners in the field differ with regard to where this gas should go - be it to existing plant at Karratha or a new one at the proposed James Price Point near Broome.

This would seem to me to be one good reason why having a bunch of multinationals jointly owning leases and production facilities is an odd quirk of the petroleum sector.

Aren't they meant to be competitors?

While the argument around the Browse development appears to be about whether or not the various partners want to invest in a stand-alone gas plant, I gather that there is another issue confronting them.

That is their obligations regarding the state's reservation policy.

The question arising is: does the state want 15 per cent of the gas from that particular field? If so, that causes big headaches for the developers if they put the project in the Kimberley where there is no domestic gas infrastructure. In essence, they may have to build a domestic gas pipeline for a small percentage of their gas or else it becomes a form a stranded gas.

An alternative would be for domestic reservations to be transferable, like proposed carbon credits. Then the Browse obligation could be transferred to another location.

Arguably, this could be tricky. What happens if the Browse partners sought to transfer their obligations to Macedon, a project that was already mooted as domestic gas? It will be interesting to see how the fine print of the domgas reservation policy, if there is any, works in this situation.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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