Your Questions Answered
We recently called for questions to be answered at the Annual Meetings of Electors for both Portage Licensing Trust (PLT) and Waitakere Licensing Trust (WLT). These meetings were held via video conferencing on Monday the 20th of September and Tuesday the 21st of September. You can watch a recording of the PLT meeting here and a recording of the WLT meeting here.
Below are the questions we received and a transcript of our answers to those questions from the Annual Meetings of Electors for both PLT and WLT.
The questions are broken into three groups:
General Questions – relating to The Trusts operations as a whole
Portage Licensing Trust Questions – relating specifically to the operations of Portage Licensing Trust
Waitakere Licensing Trust Questions – relating specifically to the operations of Waitakere Licensing Trust
If Farro Fresh New Zealand wanted to open a store in Te Atatu would they be able to?
Yes, there are no barriers to a Farro Fresh store operating in West Auckland.
If the Trusts’ purpose is “to uphold the socially responsible sale and supply of alcohol”, what evidence is there that the monopoly reduces alcohol related harm in the Trusts areas compared with other areas without a monopoly?
What actual factual and statistical evidence (not previous ‘stats’ The Trusts have rolled out which were actual falsehoods) can be provided that the ‘purpose’ of the Trusts ‘ which The Trusts say is “to uphold the socially responsible sale and supply of alcohol” reduces alcohol related harm in the Trusts areas? Not The Trusts’ stats or stats commissioned by The Trusts – actually Policing and government stats or whatever legitimate agency could provide truthful and unbiassed evidential stats.
The function/purpose of a licensing trust is stated in section 305 of the Sale and Supply of Alcohol Act (SSAA):
- to sell and supply alcohol, and,
- establish premises and facilities for this aim, including,
- the provision of accommodation for travellers, and.
- The sale and supply of food and refreshments.
The socially responsible sale of alcohol is mandated in the objects and purposes in conjunction with minimisation of harm, in the SSAA’s sections 3 and 4 and relates to the legal and social responsibilities of all holders of liquor licenses in NZ.
There is no evidence that I am aware of that demonstrates that monopoly licensing trusts reduce alcohol related harm, but the model does give a good degree of control to communities on how alcohol is sold and supplied in its regions.
What consideration has been given to converting to a Community Trust (as provided in the Sale … of Alcohol Act) which could provide increased community funding? Currently there is no obligation to provide community funding. Last year community funding was $1.1M
A quick skim of the annual report for PLT/WLT has assets of approx. $76M (purchase prices) so current value would be over $100M. At a modest investment return of 3.5% = $3.5M
There has been no consideration given to converting to a community trust as we are currently mandated as a Licensing Trust and along with Invercargill, and Matarua regions, operate specifically under section 350 of the SSAA.
Further to this I do not understand how converting to a community trust would increase community funding. I have personally converted one of the country’s original licensing trusts to a community trust and this had no impact on an increase or decrease in community funding and no pressure legal or otherwise to do so. In essence the status quo was retained.
The only benefit to operating as a community trust would be if The Trusts were to cease trading in liquor altogether, they would then be obliged to change but as it stands our community voted in 2003 for a retention of its trading conditions and business model.
What is the justification for giving only three days for the public to submit questions, as this is really a miniscule window for the public to respond to what should be a fair opportunity of time to put forward questions?
The Annual Meeting of Electors has been advertised on the Trusts website for some months and when the Covid lockdown happened, we delayed the meeting in the hope of being able to have it in person later. The statute requires us to hold the meeting within two months after the annual financial statements have been audited by the Auditor-General. As it became evident that due to Covid lockdown levels, an in person Annual Meeting of Electors would not be possible, we started to prepare for a virtual meeting and considered how we could best provide for public input. The call for questions was put out on The Trusts website and social media channels on 8 September 2021 and in the Western Leader in their weekly edition (online only in L4) published on 9 September 2021.
Why have The Trusts only just adopted the Living Wage after all of this time, when The Trusts are holding so much value? And why was this option declined previously when there is obviously enough money for this?
Is there a reason The Trusts felt it wasn’t important enough that they should have invested in their workforce with the living wage earlier?
There have been many personal changes to the organisation’s senior management team and WATS Board in the last 12 months.
I cannot comment on the past thought process but this year we thought that post COVID 2020 and early in the financial year 2021 that we were in a strong financial position and were motivated in the work that we completed with the Licensing Trust shareholding Boards to pass this on to our people, hence brining forward the adoption of full living wage and $2 per hour parity pay increase for all waged staff, this positively impacted almost 90% of our current workforce.
The original plan was to complete by 2023 at the latest but great news that due to improved financial performance we could bring forward.
Why do you only ‘give back’ a tiny amount to the public in comparison to The Trusts’ value and profits? Why do you not do so much more for the public with the profits the Trusts make and assets The Trusts hold? A mere $0.78 million in the past financial year when headline profits are over $10 million.
Again, difficult to talk about the past thought processes with so much change in personnel but whilst on paper we reported good profitability, the vast majority of this is non-cash with cash only realised when assets are liquidated (sold) or when we draw down equity investments. Actual operating profit for The Trusts combined core business was reported at $1.4m.
It also became clear this year that significant reinvestment was required in our property portfolio, hospitality market offer and deferred maintenance programs.
Early indications are that reinvestment of between $30 and $40 million will be required over the next few years. So we must, like any business, control our cash position to provide for this.
As a community owned organisation, we are not motivated to take on debt which will ultimately be another cost to the community. Therefore, our aim is to self fund all developments, upgrades and maintenance projects.
To be honest we were just so very happy last year that we were in a strong enough position to support our community.
We had planned to really ramp up community support this year but again Covid requires businesses to manage its cash despite its aspirations. Covid survival was our first priority.
However, we have recently advised that despite the current Covid issues we will continue with our Your West Support Fund initiative and have doubled the original stage 1 budgeted amount from $500k to $1m. We also hope to provide more funding rounds this year depending on how we come out of covid. Sponsorship into the community of$ 500k has been budgeted for this financial year and this figure has been retained.
Do you invest in any type of alcohol recovery program/s, given your ‘purpose’ and value?
Through our community funding program, we support a number of local social agencies who provide support and counselling services to minimise alcohol harm in our community.
We have also recently joined the West Auckland Healthy Families alcohol harm reduction program with many other social agencies including police, ministry of health and local liquor licensing local authority in our region to discuss and implement strategies to reduce alcohol harm in West Auckland.
We are very much looking forward to working in and with our community to reduce harm.
Why is The Trusts so opposed to relinquishing control of Alcohol licenses and sales?
We are not opposed to this but are guided by our community who voted in 2003 to retain the status quo. It is up to our community to decide how it wants to operate liquor licensing in the West Auckland region not The Trusts.
Why is it that so far West Auckland is still a bit of a dump despite The Trusts ‘purpose’?
We don’t think it’s a dump there are many families and individuals who love living and working in West Auckland.
Why do The Trusts pay their CEO as much as probably The Mayor of Auckland, The CEO of Auckland Transport, The CEO of Fonterra?? That seems very unfair given the status of ‘The Trusts’ is supposed to give back to the community and not be self-serving.
What is the justification of the CEO’s salary considering you are a public trust, for the public – who do not give back what they should to the public?
We don’t. You can check the CEO’s salary in our Annual Report on the Trusts website. It is in line with the skills and responsibilities the position requires to manage our businesses to benefit the community.
The current CEO is paid less than Auckland Council CEO, and significantly less than CEO Fonterra $2.2m and CEO of Auckland Transport $680k.
The Trusts CEO total remuneration package is published in our annual report.
Current CEO salary for the Trusts has reduced over the last 2 years, there will not be many organisations, if any, who can state this.
The CEO salary is benchmarked by remuneration consultant to ensure it is within the market range.
Why is the notice that the public can submit questions for the upcoming meeting not on your front web page? Surely this significant enough to put aside your propaganda for one week (or the very limited 3 days) to make anyone aware of this when they first hit your site?
Great point. Traditionally we put all of our news and publications under the News Tab on the web page, which I admit can make it difficult to locate important information.
There is no intent in doing so, it just how we have operated in the past. We will review this going forward and ensure that our important information is linked on the front page. Thanks
Why do you feel the best option for West Auckland is to reduce ability for entrepreneurial opportunities (restaurants, hotels, wine bars, better bar options and less troublesome and rough as The Trusts options) which will provide more opportunities for West Aucklanders to work, spend money and live better lives in West Auckland. These type of opportunities would attract other forms of entrepreneurial action.
We have no desire to restrict entrepreneurial businesses to West Auckland either retail or hospitality, it is a community choice not one controlled by The Trusts who operate under a community mandate.
There are many examples of hospitality entrepreneurial spirit in West Auckland with Class 1 liquor licences available to all operators on approval of the local authorities.
Bars such as:
- Goode Brothers gastro bar
- Lone Star
- Behemoth Brewing at The Rise in Titirangi
- Toby Jug
- Cleaver and Co
- Little Creatures
All non-trust venues that demonstrate the entrepreneurial spirit that is alive and well in West Auckland and we welcome these venues into the community.
If the community desires change for how liquor is sold and supplied in West Auckland there is a legal process to do so but when a poll was last called the community voted for retention of the status quo hence the reason we operate within this framework model today.
Page 4 of your annual report states:”Our responsibilities include minimising harm for our community and staff”.
Do you have any data that confirms West Auckland has less harm than other areas as a direct result of having this licensing trusts model or would you say it’s just more of a ‘feeling’ that it does? Please provide specific examples of how you have been minimising harm to the community.
Ryan Bridge asked The Trusts CEO Allan Pollard on Magic Talk Radio 8 July 2021 “How much better off are West Aucklanders with alcohol harm than the rest of Auckland or NZ?” Allan replied “I would not know the answer to that question”. Ryan also asked (in response to Allan’s statement about there being less bottle shops therefore less opportunities), “Less opportunity, does that mean less drinking?” Allan again replied “I don’t know”. I was wondering since that interview aired, does Allan or any of the elected members now have a clearer picture regarding this? And if so, please include any relevant statistics to back it up? Or we still don’t know?
As confirmed in a previous answer, at this point we have no hard data that relates to a minimisation of harm as a direct result of the licensing trust operating model. It is challenging as the Police and DHB’s are not geographically aligned to the Trusts area, so it is difficult to piece together information from various areas from various sources however it is something we are looking into further.
I can also not confirm that it was even a ‘feeling’. But what we attempt to do is operate within the confines of the SSAA to best practice.
We have a number of initiatives to minimise harm to our staff and community including but not limited to:
- Quarterly group meetings with Police, Ministry of Health, Liquor licensing authority. To discuss how we are operating, identify areas for improvement and share information on local pressure points.
- We implement an under 30 policy where all customers who appear to look under 30 are requested to provide I.D. pre purchase to manage under age purchases.
- Operate a monthly mystery shopper program to review intoxication levels, licensing checks, general compliance and adherence to under 30 policy.
- All staff complete alcohol management program as part of their induction program before operating in our controlled environments.
- The annual report also notes many of the other training programs to minimise harm to our staff and our customers such as armed robbery and personal defence training.
- Unfortunately, abusive and threatening customers is by far our biggest workplace health and safety issue that we have to manage.
- We provide funding to many social agencies and groups who work on strategies to reduce harm in our community.
- We have recently started working with Healthy Families West Auckland on an exciting alcohol reduction project to identify areas and strategies that can be implemented to minimise alcohol harm – any interested parties are than welcome to join and we believe a WALTAG representative has been invited but did not attend a recent zoom meeting. Would be great to have this sort of representation present.
Can The Trusts please describe what has been done over the past 12 months for transparency, openness and your commitment to improving the business?
The last 12 months have been dominated by Covid but we have adopted some big changes and initiatives to improve our transparency, openness and improved business performance such as:
- New elected member led ‘Your West Support Fund’ process which determines funds available for distribution and where funds are distributed. Management is charged with providing administration services only.
- Disclosure of hundreds of previously redacted documents and full release of WATS accounts to the community.
- Fully integrated I.T. ERP management solution and upgraded POS system for retail and hospitality.
- New national high street bottle store brand, Liquorland to give our community greater choice for brands, promotions and loyalty programs.
- Adoption of full living wage and pay parity increases for all waged staff, around 90% of our workforce will benefit from this initiative.
- Planned hospitality upgrades with Illingsworth and iTi first cabs off the rank, more will follow.
- Planned retail store upgrades 6 per year – Covid and cashflow permitting.
- Board review and rotation – this will be an ongoing strategy to bring new and fresh thinking to our governance board.
- Restructure of the senior management team to better support our businesses.
- Restructure of the WATS support office and reduction in staffing levels.
- Design and approval of a deferred maintenance program.
- Upskilling business programs for our managers and managers of the future.
- Commencement and co-design of new Trusts strategic framework model for our future. This will include our purpose, vision, values and key objectives for the future. This will be presented to our communities and key measurements will be communicated so that our community can review progress and comment on our initiatives.
What we have set out to achieve in the short to midterm is an organisation that is:
- High performing and community owned.
- Well respected and understood by its community.
- Delivering high community returns.
Wow 10m in profit and $0.78m given back along with claiming the wage sub from us hard working tax payers. I look forward to this establishment collapsing. We as adults should be allowed to make our own choices where we purchase beverages from. West Auckland is sick of being ripped off.
This is a comment only.
Portage Licensing Trust Questions
The PLT has reported a profit after tax of $8.762 million for the financial year and community support of $0.379 million.
The overall figures for The Trusts are $10.035 million and $0.786 million.
Can you please explain why, during a period of great need, the PLT board chose to distribute such a small fraction of profits to the West Auckland community? (noting that those profits retained have increased cash balances and reduced payables – they have not been used to expand or improve the operating business or investments).
Actually, the PLT Board didn’t choose to distribute only a small fraction of our operating profits back into the community; in fact most of the operating profit went on immediate aid into the community, first during lockdown through support of food banks and then on keeping community organisations functioning and paying their operational bills during lockdown.
We in fact did well to distribute any funding during what was a very uncertain trading period because of Covid.
The reason why it looked like a small fraction of the profits is the cash figure that is quoted in the question includes the returns from the sale of the Richardsons Tavern business and property. That’s where the bulk of that after-tax profit figure comes from.
As responsible stewards of a community business, proceeds of a capital sale need to be invested back into capital assets and also on upgrading the properties we’re currently operating. The CEO has already referred to this in an earlier response, but we do need to have some significant reinvestment especially in our hospitality venues but also into some of our other operating properties over the next few years.
That is the responsible avenue for dealing with the proceeds from that capital asset sale.
So, in terms of the actual cash operating profits from our business, much of that did in fact get returned to the community during this needy time and were as widely distributed as we could manage.
Does the PLT have any documented policies (or other guidance) for:
– how much profit will be distributed?
– whether profits from operating and non-operating activities (e.g. property/equity revaluations) will be distributed?
We do not, however, in line with our ongoing strategic review we are having discussions on both of the points raised with a view to future strategic intents.
Does the PLT board acknowledge that this statement (from the Memorandum of Understanding between WATS / PLT / WLT, emphasis added) is inappropriate and does the PLT have any plans to amend the MoU?
“Annually as part of the budget approval process, WATS will report to each Trust recommendations in regard to what, if any, level of distribution of profit (separate to sponsorships and rebates) to the community is recommended. The WATS report and any Trustee decisions will have utmost regard for sound financial business practice in respect of retaining earnings for long-term future growth and financial sustainability of The Trusts business. Any decision on where and how these profits will be distributed amongst the community will be made by the Trustees in consultation with WATS and having regard for the current sponsorship plan of WATS and the strategic aim of consolidating community favourability. WATS will make recommendations to the Trustees annually outlining where WATS believes best value in terms of returns and recognition for The Trusts can be made in respect of profit distributions and/or commercial sponsorships.”
The answer is yes, the statement is inappropriate. PLT has been involved both:
- with seeking to have the financial reporting mechanisms clearly identify available cash, surplus to business operational requirements, which should make up a “community dividend” for distribution to the community and
- with revamping the grants process so that surplus available cash is distributed on the basis of community need by a delegated committee of elected members in response to community applications. Oversight mechanisms for these community applications have been clarified and applied.
Commercial sponsorships have continued to be considered as business expenditure and have remained a matter for the WATS Board.
As part of the whole WATS Board review process, elected members have revisited the purpose and values of the Trusts as a preliminary to a review of strategic planning for their implementation by the WATS Board.
Although not specifically identified in this process, PLT would assume that all relevant documentation, including the MOU, would be revisited as part of a strategic review.
Waitakere Licensing Trust Questions
I heard you were refurbishing Mr Illingsworth – What is the reason for this when it is practically brand new?
New management team see more opportunity to further develop this property into a modern pub for the Te Atatu peninsular. There will be a greater focus on local craft beer, improved food offering, warmer internal ‘look and feel’, improved external area.
We are very aware that we must improve our hospitality offer for the community – this is just the start, and we are excited about what can be achieved for the future, there will be a cost to these initiatives and good pay back over time.
What will you do with the proceeds of the sale of the Te Atatu Tavern?
As discussed, we have plenty of work to do to upgrade our facilities and infrastructure and we also have aspirations to increase community support so any funding from this sale will be channeled in these directions.
Thank you for the opportunity to ask questions even though we are in lockdown level 4. I think it’s great to have an opportunity to ask questions even if one cannot make the meeting due to i.e. work commitments.
My question is for Linda Cooper and is regarding social media expenditure, and policy.
The Trusts is, at the time of writing of this question, running 25 paid Facebooks Posts. Virtually all of them are about who received funding from The Trusts. In comparison, the NZTA (A nationwide organisation) is running 20 paid Facebook posts. All of which are in some form encouraging people to be safer on the road.
Also, The Trusts is now also (unpaid) Facebook posts which recognize certain West Auckland initiatives or organisations. This clearly gives them a higher exposure in the community over others.
I would assume that The Trusts has put processes in place to ensure that the decision on who receives extra exposure to the community is fair and without bias. I would like to understand what these processes are. More specifically:
• What is The Trusts’ policy on justifying which posts are paid (and thus reach more people) and
• which posts are not and who is involved in making this decision.
There is no policy as such it is part of the digital marketing plan based on these core objectives
1. Advising community on how community money is spent
2. Promoting great initiatives in West Auckland
3. Necessary Operational updates
Decisions are made by management taking the following into consideration
1. Finite resource available (we can’t tell every story)
2. Willingness for the organisation to participate
3. Sponsorship contractual requirements
4. New initiatives and new funding take precedence
The release of the WATS Ltd financial statements for the first time without redactions is a welcome change.
With these accounts now available, it is clear that a significant escalation of administration costs within WATS has been hidden from the public over a number of years. WATS Ltd’s administration expenses (excluding freight) have grown from $3.6 million in 2012/13 to $10.2 million in 2020/21 (an increase of 280%). Over the same period, revenues have grown just 19%.
– Does the WLT board stand by their previous decisions to refuse the public release of the WATS Ltd financial statements?
– Can the WLT board explain and justify why these increases in head office expenses were necessary?
WATS Board and management in consultation with our shareholding boards made the decision to release the WATS accounts in full, this is a change to its previous position. But the WLT maintains its previous position on redacted information whilst noting the significant release of WATS financial information in the last 12 months.
There has been a lot of work completed in the last 12 months to analyse WATS head office costs. This included a significant restructure of the head office workforce.
Currently all costs are under constant review with the primary aim to reduce our overheads. There will be a significant reduction in WATS costs over the next two years as a result.
As we now have a new CEO, senior management team and have just completed a Board review and rotation for the first time in 9 years it is not appropriate or possible to explain the rationale for previous costs, but we agree that our head office costs must be reduced, and we are working towards this aim.
Documents released previously have made reference to an ERP project which appears to have suffered from some problems.
– When was this project first discussed with the WLT board and what were the project’s total anticipated costs?
– What is the current budget / forecast for the total costs of the project?
– How much of these costs appear in the 2020/21 financial statements?
Changing ERP and software systems is not a straightforward process with entities such as NZ Police, Ministry of Education, Ministry of Health and Lion Breweries all experiencing significant issues with implementation; The Trusts were no different and had to overcome some significant challenges due primarily to old software programs and outdated hardware.
ERP financial software system change requirements were first discussed as early as 2014.
Initially the ERP change was only for an upgrade to our finance system.
During the initial discovery phase, it was highlighted that the inventory management system also required upgrading, which increased our costs. A one-off implementation budget of $296k was approved.
We experienced some significant challenges with design phase and implementation.
Additional costs were incurred due to an increase in design fees in an attempt to integrate new and current systems. Much of this failed.
We decided to terminate our original project manager in 2020 and contracted a new project manager in late 2020 with a better skill set to oversee the whole project, including design, testing and implementation – this has worked really well.
Further discovery phases highlighted that we must also upgrade outlet point of sale hardware and software systems.
On strong advice we updated all inventory management and POS systems to LS retail and hospitality management systems.
In doing so we will now have a fully integrated I.T. system company wide.
The additional requirements increased the projects costs.
Current budget is $1.125m but early indications are that we will come under this budget.
We wrote off $585k from original project costs when we terminated our project contractors and for work completed to upgrade some of our old software systems, particularly the inventory system. Unfortunately, the planned upgrades to the old systems did not meet our requirements, hence the need to re-engineer the whole project.
The $585k was written off in FY21 and a combination of capital and operational expense will be reported in the FY22 financial year.
President Cooper, representing the WLT at a select committee hearing in 2020, said the following:
Dr Nick Smith “Do you think it would be appropriate to spend trust finds to promote and support the ongoing monopoly?”
Linda Cooper “No, because we don’t do that, so I think, it isn’t appropriate to do that.”
In response to a question I asked at the public meeting of the WLT in May 2021, President Cooper responded on behalf of the WLT with this statement:
Should there be a referendum in the near future, do you intend for The Trusts to advocate for the continuance of the monopoly and do so with public resources?
I draw your attention to my previous response but further advise that if there is a referendum, we will, like many other community owned organisations in the past, vigorously defend a business model that was voted for, by our community, in 1972 and again in 2003. Whilst we appreciate that there will always be members of the community who would prefer a different operating model, we are of the very strong opinion that the majority of our community would prefer to retain control of the sale and supply of alcohol in West Auckland and for the distribution of surplus profits back to the community from their assets. As such we will continue to promote, advocate, and advertise the benefits of our businesses and our operating model.
Also, subsequent to the select committee hearing, a report from a WATS Ltd shareholders meeting in 2018 was released which states that a “fighting fund” had been approved by the WLT board to “meet the challenge from WALTAG head on” and to ensure “the public make the right decision”.
– Is it the position of the WLT board, that it is an appropriate use of trust funds, to promote and support the ongoing monopoly?
– Can the WLT board explain why there has been significant increases in advertising and professional services in recent years (coinciding with the emergence of WALTAG)?
Firstly, to clarify, there never has been, or will be, a ‘fighting fund’ this was a minuted statement at a WATS Board meeting from a previous Chairman who unfortunately passed away earlier this year.
It was requested that management review all expense lines, accruals etc. to identify if we ever had a ‘fighting fund’ and no reference to a ‘fighting fund’ was discovered.
Whether the community decides to have a poll or not, The Trusts will continue to promote its goods and services and is very proud of what has been achieved for the benefit of the West Auckland community with its community assets since 1972. That is our position.
The increase in advertising is a direct result of our aspirations to better promote the goods and services that we provide and the benefits that have been delivered to the community.
We have also replaced our Marketing manager over the last few years, and this coincided with a new and improved advertising and marketing strategy and increased budget.
We have implemented some really good community funding initiatives over the last few years such as ‘Million Dollar Mission’, our ‘give back’ campaigns, ‘Your West Support Fund’; all of which had to be promoted and advertised to the community to ensure that our people were aware that funding was available and those in need should apply.
It is also important that with some of the really positive funding initiatives over the last few years that we communicated the positive impact that this has to many of our West Auckland groups in real need and to demonstrate the benefits of community ownership and what can be achieved by working together.
It is not up to the Trusts or WALTAG to decide the outcome of a poll, this is a community decision.
All WALTAG or The Trusts can do is to promote the benefits of change or retention of the status quo; the community will decide what it wants.
The WLT has recently announced that the Te Atatu Tavern site at 3 Pringle Road is being offered for sale.
– Will the WLT board consider the plans of (and/or seek assurances from) prospective purchasers to ensure that the future development of the site delivers a great outcome for the Te Atatu community?
– Does the WLT intend to distribute the proceeds of the sale to the community through grants (or other means) or does it have plans to retain those funds for reinvestment (and if so, what are those plans)?
Yes, part of our brief is that we want to be fully engaged in the sales process to make sure it is the right outcome for the Te Atatu Peninsula.
The WLT community has elected members on both the WLT and WATS boards from this area who will be part of the decision-making process for the future of the site.
I have previously answered this question but for the record it will be a combination of reinvestment in our asset base and distribution to our community but as stated previously our property and infrastructure requires some significant investment over the next few years.