Published on 20 Aug 2025

Balancing Cost Recovery and Harm Minimisation in Alcohol Licensing: Review of Fees

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Allen + Clarke helped the Ministry of Justice tackle a complex challenge: reviewing alcohol licensing fee regulations to make the system work better for local councils. Using clear data and stakeholder insights, we developed practical solutions that supported both effective cost recovery and harm reduction.

 

  • We built evidence-based statistical models showing how different regulatory implementation approaches would affect outcomes, giving the Ministry confidence in planning decisions.
  • Our analysis of financial data from 67 Territorial Authorities revealed patterns in cost recovery success, highlighting where targeted improvements could make the biggest difference.
  • We created recommendations that balanced financial sustainability with harm minimisation, strengthening New Zealand's alcohol regulation framework.
Our work provided the Ministry with a clear understanding of why many councils struggled with cost recovery and evidence-based recommendations for regulatory improvements. We also provided a balanced framework for addressing both financial sustainability and harm minimisation objectives, with statistical models predicting outcomes of different fee approaches.

Uncovering the gaps in alcohol licensing

The Ministry of Justice asked us to review the alcohol licensing fee regulations after five years of mandatory operation. They needed to know if the system achieved its dual purpose: helping councils recover their costs while contributing to reducing alcohol-related harm. 

A concerning trend had emerged - less than half of councils fully recovered their licensing costs, and 95% relied on the default fee structure rather than creating local bylaws. The Ministry needed to understand why so many councils struggled and whether emergency measures implemented in response to COVID-19 restrictions had affected the system. 

We tackled this challenge through three connected phases:

  • Website Generic Icons 1200x1200 GREEN 31 Discovery and Planning - we reviewed key documents, sharpened our research questions and developed a detailed project plan with targeted consultation strategies.
  • Website Generic Icons 1200x1200 GREEN 31 Multi-method data gathering - we collected both qualitative data through stakeholder interviews and literature reviews, alongside quantitative data from surveys and financial analysis from all 67 councils.
  • Website Generic Icons 1200x1200 GREEN 31 Analysis and recommendations - we modelled current and future outcomes, conducted sense-making workshops with the Ministry, and developed clear, actionable recommendations.
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Flexible solutions for different Councils

Our analysis revealed that many Councils avoided creating local bylaws because the process was too complex, even when the default fees didn't cover their costs. Councils with the largest and smallest populations achieved better cost recovery, suggesting medium-sized authorities faced unique challenges. Temporary COVID-19 measures also revealed opportunities for permanent efficiency improvements. 

Based on our findings, we recommended:

  • A more flexible fee-setting system with maximum fee structures while keeping default fees as options. 

  • Adding an hourly rate option for complex applications requiring extended processing time. 

  • Implementing a base administrative fee payable upon submission. 

  • A predictive model that accounts for Council characteristics like population size, density and deprivation levels. 

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