On 8 December 2016 the NSW Government released its response to both the Callinan Review and the Small Bar License Review (see our September update here) and, bucking the recent trend of increasing regulatory burden and restriction in the industry, the news is actually largely good for business.
Although nothing too exciting arose from the Callinan Review itself, with the Hon. Ian Callinan AC QC generally finding that the license freeze and lock out laws were effective and appropriate and should continue largely unchanged, yesterday’s response from the Government contains some hidden gems that are likely to cause some joy amongst landlords and financiers, and those looking to enter into or expand their presence in the small bar and/or restaurant and café scene.
It is proposed that all of these changes (other than changes to the Three Strikes Regime and bottle shop trading hours) can be implemented by way of a yet to be notified change to the Liquor Regulation 2007, to commence in January 2017.
Changes to the Three Strikes Regime and bottle shop trading hours will require a vote of parliament and it is proposed that legislation will be introduced into parliament early next year.
A provisional approval system will be introduced for low-risk venues including restaurants and cafes so that they can begin selling liquor as soon as they lodge an application for a license.
This is a very significant and much needed reform of the liquor licensing system, particularly in the current environment where applications for new licenses cannot be lodged until development consent is first obtained and even the most basic of applications are taking many months to be assessed. This is a very commercial and pro-business reform that we expect will be warmly welcomed by many.
To be eligible for provisional approval the intention to operate as a licensed premises must form part of the development application that is publicly notified by the local council and the liquor trading hours must be consistent with the standard trading hours of 5 a.m. to midnight Monday to Saturday and 10 a.m. to 10 p.m. Sunday.
The Government has also accepted the recommendation from the Small Bar Review that the patron limit for the small bar license be increased from 60 to 100, which will make this form of license far more attractive to venue operators.
It is important to remember that the small bar license carries with it a number of important incentives to encourage its take up, including:
- an exemption from the requirement to submit a Community Impact Statement where the local police and the Secretary are notified of the development application for the small bar use within the required timeframes;
- an automatic approval of an extended trading authorisation to permit trading until 2 a.m.; and
- an exemption from the liquor license freeze (in freeze precincts).
However, until now, the patron limit of 60 people has been too low for there to have been significant take up of this license. An increased limit of 100 people is likely to result in the establishment of many more small bars.
The 2 a.m. automatic extended trading hours will also be expanded to include small bars located within freeze precincts (although this will not override any development consent limitation on trading hours).
General bar and on-premises licenses where the development consent permits the operation of a small bar will be able to convert to a small bar license free of charge for a 12 month period (from January 2017). Where a premises is currently operating as a small bar under an on-premises license subject to the primary purpose test, which creates significant compliance risk, operators should be quick to jump at the chance to convert to a small bar license.
Also announced yesterday were some proposed reforms to the Three Strikes disciplinary scheme to move strikes from a venue’s license to individual licensees instead. This will mean that strikes will no longer have an adverse impact on the bricks and mortar hotel asset itself, which is bound to be welcome news for landlords and financiers.
There will be some provision for escalating penalties to be imposed on venues themselves where multiple strikes are incurred by the same licensee, although the detail of this is not yet known.
Licensees will be able to apply to have a strike lifted after 6 months if they can demonstrate that they have complied with any remedial action and can effectively manage the risks that led to the strike.
Bottle shops will be able to trade for an additional hour, until 11 p.m., and home deliveries of alcohol will also be able to occur until 11 p.m.
The lockout laws applying in the Sydney CBD and Kings Cross will be relaxed for live entertainment venues for a trial period of 2 years.
Eligible venues will have a half hour extension of the lockout and last drinks times applying to other venues in the precincts, with a 2 a.m. lockout and 3:30 a.m. last drinks.
To be eligible, a venue will need to be able to demonstrate both that it provides substantial live entertainment including after midnight and that it has a genuine focus on art, live performance and cultural events.
If you would like to find out more about these changes, and how they may impact you, please feel free to contact us.