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Economics References Committee - 20/11/2015 - Personal choice and community impacts

GRAND, Mr Douglas, CEO/Coordinator, Kings Cross Licensing Accord Association

JANK, Mr David, Director, Arcadia Liquors

LAZARUS, Mr Andrew, Director, Hotel Pursuits trading as Soho Bar

PRIOR, Mr Anthony, Chief Operating Officer, The Keystone Group

Subcommittee met at 09:06

CHAIR ( Senator Leyonhjelm ): I declare open this hearing of the Senate Economics References Committee's inquiry into personal choice and community impacts. The committee has appointed a subcommittee for the purpose of inquiry hearings. The Senate referred this inquiry to the committee on 25 June 2015 for report by 13 June 2016. The committee has received and published 432 submissions, which are available on the committee's website. These are public proceedings, although the committee may determine or agree to a request to have evidence heard in camera. I remind all witnesses that in giving evidence to the committee they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee. If a witness objects to answering a question, the witness should state the ground on which the objection is taken and the committee will determine on whether it will insist on an answer having regard to the ground that is claimed. If the committee determines to insist on an answer, the witness may request that the answer be given in camera. Such a request may also be made at any other time.

I take this opportunity to thank witnesses for taking the time to appear before the committee today. I welcome Mr David Jank from Arcadia Liquors, Mr Andrew Lazarus from Soho, Mr Douglas Grand from Kings Cross Licensing Accord and Mr Anthony Prior from the Keystone Group. I invite each of you to give a brief opening statement before we proceed to questions.

Mr Grand : As per my submission, I have represented the accord members now in a full-time capacity since 2011. The issue for our members was the volume of restrictions that were placed on the area from December 2012; the time not given to measure the implementation of the restrictions in a normal manner; and further layers of restrictions laid on top of those restrictions, which inevitably led to business failure. That was the purpose of my submission.

Senator DASTYARI: Thank you for coming here and being part of our inquiry today. We are looking at this from a fairly broad perspective. We want to get a sense of what the consequences and impacts on your businesses are. We are going to talk to residents' groups later as well. How have things changed since these laws were put in place? I suppose that is a fairly easy starting point.

Mr Grand : I have worked in the area for almost 30 years on and off as well. Most of us here have been in Kings Cross for a period of time. It was a very tolerant area and the restrictions placed upon licensed premises removed that layer of tolerance to all its licensed premises and the vibrancy of the area has gone. If you speak to a lot of the locals, they do not like what has happened. It has lost its character. We believe it has actually lost its position as an entertainment precinct as well.

Senator DASTYARI: I am interested on a personal level about your own institute, your own licences and how things have changed in the past two years as a result of this.

Mr Prior : We have been operating in the area since 2008. When we joined the area it was quite vibrant and fairly active. The main issue for us is that if we look at it as a single institution that runs and we have an obligation to perform our duties as per certain legislative requirements, when a blanket set of rules is put on all operators there is a real unfairness. I like the idea of you are held to account as an individual business or as an individual in the public. I do not like the idea that one size fits all. It really creates an anticompetitive environment. It definitely has a displacement consequence where the rules are not in place. It does not give you a chance to prove that you can run your business in a professional manner and not potentially contribute to some of the issues that may have brought about the legislation.

Senator DASTYARI: You are the Chief Operating Officer of the Keystone Group. You said the establishment you have in the Cross is called the Sugarmill hotel. What is the difference in the business from two years ago to now.

Mr Prior : Firstly, we pretty much close at midnight now, somewhere between midnight and 1 am, where our liquor licence permits us to trade reasonably later than that. We would have been trading to the extent of our liquor licence in the past. The business model is now changed to one of heavy reliance on gaming, heavy reliance on food—which is not a problem—but looking at more limited avenues to generate revenue than we had in the past. I do not think we are necessarily catering to the equivalent audience that we used to, so I think we have restricted who can come to the business now by virtue of how we trade.

CHAIR: What difference has that made to your business as a business—

Mr Prior : Financially?

CHAIR: Financially and staff.

Mr Prior : On both levels quite significant. Our earnings per annum are now hugely different to what they were. Our staff levels as a consequence are hugely different because certain parts of the business no longer trade.

CHAIR: Can you estimate percentages?

Mr Prior : We would be down 25 per cent staff.

CHAIR: And turnover?

Mr Prior : Probably down 40 per cent.

Mr Lazarus : I do not think the intention of the laws was to wipe out the entertainment precinct, but effectively that is what has happened. There are reports that patronage is down some 85 per cent. The patrons are not coming. Businesses are closing. That was the case for me. I have owned my building for 20 years come January and it was built in 1939. It has traded continuously ever since but it got to the point where it was no longer economically viable to continue trading so I took the decision to shut it and look at alternative uses for the building. More recently, because there has been so much publicity about Kings Cross changing from an entertainment precinct to a residential area, a lot of developers have been coming into the market with the view that it is never going to go back to being an entertainment precinct. I have been approached consistently for the last couple of months by property developers to buy the site. They take the view that it is going to be residential in the future.

CHAIR: So the days of the Kings Cross of old are over, they are saying?

Mr Lazarus : Yes, and they are willing to back that with their cheque books. In December last year I came very close to selling the property. The sale fell through because of a police matter, and I have to thank them now because my property value has gone up more than 50 per cent. And that is being closed—we are talking about a business that got shut down and its value has gone up 50 per cent in less than a year.

CHAIR: So property prices have in fact risen?

Mr Lazarus : If that property can be converted into residential, I believe it has risen. Whilst I was very passionate about my business, which I have been running for 20 years, and it was quite devastating to close down, financially I am better off in terms of that specific property. I also have other businesses, and they have all benefited because the business has been pushed outside the lockout. Overall, personally and financially, I could not be happier. But the way this has all come about is just not fair.

CHAIR: We will get into those details. I acknowledge that you might be different because you have the benefit of having businesses outside the lockout area and others who do not have not had that advantage. If Kings Cross is losing its position as an entertainment centre, as you are suggesting, is there a new entertainment centre in Sydney being established or is it diffuse now?

Mr Prior : Multiple areas have picked up on the back of it. In a very specific sense Kings Cross was a designated entertainment precinct, with late-night trading, as was another section of the city which we have businesses in, which is King Street wharf. If you look on a map, they are specifically titled late-night entertainment precincts. Other areas, by virtue of spillage and displacement, have become that—Double Bay, Bondi, Newtown, Pyrmont. There are people in all those locations because they can get into venues after a certain time. They are entertainment precincts now as a result of this, I believe.

Mr Jank : I operate outside the lockout zone. Your question was whether there has been diversification, and my answer is essentially no because there are laws that hold it in check. As I have stated in my submission, we need a broad spectrum approach whereby we decentralise the late-night consumption of alcohol, which means allowing people to stay in their local area and then allowing Kings Cross and other entertainment precincts to do their job, as true late-night operating areas, where they can be policed and people can spend a late night safely.

CHAIR: I am old enough to remember when Kings Cross was the centre for R&R during the Vietnam War. I used to live in Melbourne and I visited Kings Cross at around about the time. It was undoubtedly a late-night entertainment area then. Have you ever known it to not be a late-night entertainment area, until now?

Mr Lazarus : No.

Mr Prior : No.

Mr Jank : Never.

CHAIR: Most of you are younger than me, but you have been involved in it 30 years?

Mr Grand : I started working in Kings Cross in 1981, and obviously it was a very vibrant night-time area from that time, and obviously before that too, with the R&R.

CHAIR: We are talking a major transformation, essentially unprecedented in Kings Cross history, at least in many decades.

Mr Grand : Absolutely.

Mr Prior : Absolutely.

CHAIR: You are quite convinced of that.

Mr Prior : Andrew's point is that it was not an intentional transformation but a resultant transformation. There were not a lot of strategic elements in place to support it and to push the area into that place as quickly as possible. It is just happening naturally and through businesses closing and opportunistic developers moving in. It is happening, but there is no plan—it is about letting it happen and seeing what comes out the other side.

Senator DASTYARI: No matter what happens, the property developers end up okay.

Mr Prior : If you go back to the intention of putting legislation in place, no-one wants violence to be occurring, so you need to put strategic things in place to curb that, but how do you manage the outcome?

CHAIR: We will get onto that in a minute.

Senator DASTYARI: It seems from the evidence you are giving us, which I think is quite fascinating, that we were all given the same reasons. We were told that this was a measure designed to prevent antisocial behaviour by a handful of bad apples. Everyone admitted at the time that there is a minority of people using the Cross who engage in antisocial activity and these kind of rules came into place which were designed to combat that. The evidence you are giving us is that, while that may have been the intention, there has been some unintended consequences. The largest unintended consequence is that the area itself has now fundamentally changed. The lockouts are at 1.30 am, is that correct?

Mr Prior : Yes

Senator DASTYARI: But it is not just that people are locked out at 1.30, it is that they do not come at all because of that?

Mr Prior : That is correct.

Senator DASTYARI: Can you explain that to me?

Mr Grand : Certainly, Kings Cross and Oxford Street were the two historical late-night zones of Sydney, and they relied on the late-night economy where people—especially the young ones—do not come out until a later time. Kings Cross would not normally get busy on Friday and Saturday nights until 11 pm and it would go right through until 5 am or 6 am. The 1.30 am lockout and the first round of measures reduced the trading hours to 4 am in Kings Cross. What it meant was that some of the people who were coming in from the suburbs did not find it as beneficial to get there before 1.30 am and to then leave by 3 am because they are paying high transport costs—they might be paying $150 for a cab ride. So they have tended to stay in areas where there are no restrictions.

Mr Lazarus : It becomes a snowball. When people stop coming then other people do not want to come because the vibe is not there for them.

Senator DASTYARI: The atmosphere is not there.

Mr Lazarus : Yes. Once volumes started to decline and people stopped coming it snowballed. I do not think the intention was ever to drive 85 per cent of total business away from the Cross, but once it gets to 30 per cent it keeps dropping and dropping, and the snowball effect is that people have stopped coming altogether.

Mr Grand : I think the intention there was to actually stop some of the crowds coming in. The City of Sydney measured the area at 22,000 persons on a Friday and Saturday night, and now we believe that we are down to about 5,000 or 6,000 on a Friday and Saturday night. The 1.30 am lockout was, in my opinion, a definite intention to see if they could stop people coming to Kings Cross, which has definitely worked.

Senator DASTYARI: Maybe we are jumping ahead here, and I think Mr Jank touched on this earlier. I will not get to the whole wad of the other measures, because I know that Senator Leyonhjelm has some questions. The logic that was applied as to why you would have the lockout—the boundaries—let's face it, are fairly arbitrary. They were designed by politicians in discussion with others. There are boundaries at the moment about where these lockouts go and they have obviously put reasoning behind it, but it is fairly arbitrary—I mean, these are lines on a map.

What is to stop that same logic being applied, and what would your view be about extending it, beyond that precinct? We have some people here who are going to talk about Newtown and a few other places a bit later, but it seems like the anecdotal evidence is that a lot of the business that is not there anymore is not because kids are not going out any more, it is that they will go elsewhere. At what point do you draw the line? You talk about the new areas. The eastern suburbs, the Coogee area, seems to be getting a lot more traffic. Newtown seems to be getting a lot more traffic and fundamentally changing. If the solution is always going to be to shut it down, surely it becomes never ending until you shut down Parramatta and Bankstown.

Mr Grand : It does. We know that a lot more warehouse parties have sprung up because of the lockout laws. Generally, they are unregulated premises. I know that Gaming and Racing, and the police, have had various issues with trying to shut some of those parties down. My view is that, once the laws start to come in, they basically accelerate and you are talking about bigger and bigger boundaries. But it really does not get to the underlying problem that was there in the first place, which is that a small percentage of people ruin the night out for everybody else. The issue is that you are just transferring problems from one area to another. The lockouts simply lock people out; they do not solve the problem. I have got stats here for Kings Cross which I am happy to talk about later on. If you add in the 80 per cent reduction in foot traffic in Kings Cross, the stats are not impressive. If you do the whole calculation of the closure of business, the reduction of patron numbers and the decrease in foot traffic, it is not working. That is our view. It needs an early review, which was recommended for the parliamentary inquiry which did not happen. As Anthony and Andrew have said, we do not think it was the intention to bankrupt businesses. But the media and other groups have created a situation where no-one wants to make a decision because it might be unpopular. That is not good for business or employment.

CHAIR: You said in your submission that the one-size-fits-all policy provides little or no incentive for 'previously and continued well-run premises'. Would you like to explain what you mean by that?

Mr Grand : At the time the measures were put in place in Kings Cross, there were no level 1 or 2 premises. The government issues a schedule 4 violent venues list every six months. There were no premises on that list. So basically the premises here were performing the requirement under the Liquor Act 2007 to be well-run premises. The Kings Cross plan of management put layers on their businesses that were higher than the level 1 restrictions under the act, which overnight meant that the most violent venues in New South Wales had those restrictions even if they were well run for 20 years. It was just punishing people under the one-size-fits-all policy. It just did not work.

CHAIR: How do those incentives work now? Is there any incentive to run a business in this area any differently now that the lockouts are in place?

Mr Prior : It could be considered an incentive. You can apply for an exemption from those restrictions by giving up other aspects of what you may normally do. You can give up serving alcohol to stay open and allow people in your business.

CHAIR: You can avoid the lockout?

Mr Prior : Yes. You can apply for an exemption from the lockout and continue to let people in after 1.30 am as long as you do not serve alcohol. You stay open for gaming.

CHAIR: You are allowed to serve dope but not alcohol?

Mr Prior : You can serve soft drinks and let people play poker machines. That is perhaps an incentive if you have a certain philosophy on the way you want to run your business. We have a venue at King Street Wharf which is in an entertainment precinct and in the lockout precinct. In 2008, when the Declared Premises Program was introduced, one of the venues was placed on that list at a certain level and had lockout restrictions imposed. We were able to work very closely and carefully to get it off that list by performing well. It has now maintained that for the last six years.

CHAIR: And there is no incentive for that here in the Cross?

Mr Prior : No, and that venue has now been placed back on the list by virtue of lockouts being reintroduced. It had maintained six years of a clean record. We will not go into the semantics of why it was put on the list in the first place. It was performing well and we had a great relationship with all the authorities. But by virtue of the new lockout regime it was put back on the list.

CHAIR: Some submissions—I do not remember which ones—have said the lockout rules are now focused on maintaining order within the premises rather than outside the premises. Therefore there is no incentive for any premises within the lock-out area to do anything about what happens outside their doors—is that a legitimate—

Mr Prior : There are legislative requirements of what you need to do within the vicinity of your venue but, to a point, yes, you do not need to be as concerned, because there is no-one out on the streets so you can just turn all your attention inside. There was a very coordinated approach to managing the streets up here amongst the venues prior to the lock-outs. The actual precinct had employed a private security group to support certain parts. That has all gone.

CHAIR: That has gone, has it?

Mr Prior : Yes.

CHAIR: Leaving aside the diminished traffic outside the premises, would you say it is any safer in the street, subject to the lock-outs?

Mr Prior : Anecdotally, I would say it would not be because there would not be as much attention.

CHAIR: There is not as much focus on it.

Mr Prior : There is no policing at that time.

CHAIR: Is it any less rambunctious inside the premises now? Is the incentive to control what occurs inside the premises any different?

Mr Prior : Definitely, but, from 1.30 am, you are starting to wind up your business—

CHAIR: You are winding down.

Mr Prior : so you are starting to pack up. The venue is pretty much done in most instances at that point.

CHAIR: I have still got quite a lot of questions. Mr Jank, you have mentioned the hospitality industry in Europe with its emphasis on personal responsibility. Could you describe how this works for us.

Mr Jank : There is a culture that exists in European cities that small venues are allowed to operate until—it does not make any sense for them to do so by patron numbers. It disperses the crowds to a lot of smaller venues and I think that, in view of what has happened to Kings Cross, it is quite important because Kings Cross should be allowed to do what it does successfully without having this late-night pressure of people being ejected from venues. It is a culture that we need to establish amongst ourselves.

CHAIR: You mention personal responsibility. How is personal responsibility applied in Europe in your experience? How is responsibility reflected on the person in Europe?

Mr Jank : I suppose that people have learnt to control themselves. We have a hangover from the six o'clock swill that still continues to this day and I think a 1.30 lock-out is actually a reflection of that; it has just been moved around the clock.

CHAIR: One of the criticisms of the lock-out is that it is a one-size-fits-all punitive measure rather than applying to individuals who cause trouble and are responsible for alcohol fuelled violence—I think that was largely the point Mr Grand was making. In your experience, how do they manage that in Europe?

Mr Jank : My experience is from smaller venues. I think that they have a natural way of managing patrons, because people are more transparent in a smaller crowd. With a majority of people, we need to see a discerning element: those who want to stay out late go to entertainment precincts; and those who do not can stay in an area where they can stay out late enough to complete their evening. I think those people in those venues are easily controlled, and they control themselves.

Mr Prior : Doug mentioned before the layering conditions that have been imposed. If you were to talk about the statistical success of some of those in the past, you could talk about the scanning regulations, which was proven in Newcastle to work quite successfully. In a coordinated approach, those licensed venues that adopted scanning regulations voluntarily saw some real success. We already proposed that along the way: to take personal responsibility in places. If someone is prepared to scan their ID as they enter a venue, have their identification recorded and then performs an act of misconduct, it is very easy to potentially track them down and hold them to account for that behaviour. That is something that was proposed for Kings Cross that we were quite supportive of—

CHAIR: You started to do it, didn't you? Some places—

Mr Prior : Yes, there was a delay due to the actual probity of the operator and the security issues relating to that. While that delay occurred lockouts were imposed as a second measure prior to the first measure being put into place. We were very supportive and all of the venues were able to have a coordinated approach to identifying problem patrons and removing them, banning them and having them not turn up—even at Mr Lazarus's venue—out of the suburbs, because you may even still choose to have that system in place and know that it is a problem patron. A very quick message gets to people to say that if you do not behave you potentially cannot go out and participate in these types of things at all.

CHAIR: Did you say that that was done in Newcastle?

Mr Prior : Yes.

Mr Grand : It was done on a voluntary basis in Newcastle.

CHAIR: A voluntary basis?

Mr Grand : Obviously the Kings Cross model was different and the actual idea of ID scanners was taken to Premier O'Farrell by the accord and the AHA.

Mr Prior : But we had proposed scanning as a measure prior to Kings Cross planning management as a voluntary measure as well.

Mr Grand : Yes.

CHAIR: The other suggestion that I have heard in relation to Newcastle—and tell me what you think of it—is that the lockout approach was more successful in Newcastle because it applied to the whole city. It was not just a designated area. Is that accurate or not?

Mr Grand : Looking at regional areas like Newcastle is a bit different to looking at an international city like Sydney. We are talking about 500,000 people, maybe, versus a capture of six million. Newcastle had its own issues, but Newcastle, at peak, according to one of the previous directors in gaming and racing, had a foot traffic of 12,000 people on Saturday night, and now it is 2,500. Whilst everybody says that the Newcastle model was successful, again, they are not measuring the actual business destruction during that period. One of the things that came out of Newcastle that the licensee supporters said was most effective, but a voluntary tool, was the ID scanners.

Mr Prior : There was quite a huge displacement issue that occurred with the lockouts in Newcastle.

CHAIR: Was there?

Mr Prior : It is the same thing. People stopped going to certain areas, so if that is the intention of the legislation then it was successful. They then potentially go into other areas where a rise in occurrences happened. But when they voluntarily put the scanning into place and are able to identify problem patrons and remove them, ban them, that is where you get success because you start taking that personal responsibility approach.

CHAIR: That certainly appeals to me. What I am looking for is substantial evidence of that. The anecdotal stuff that I have heard was to the effect that lockout policies can be effective at reducing alcohol related violence if they apply across an entire town. So some country towns and rural areas have applied it and they claim that it was a success. I have heard it said about Newcastle, too, but I must admit I have not read it in depth. What you are saying is that it was not responsible for the improvement of the situation in Newcastle; it was the ID scanning that did it.

Mr Prior : No. Going to Mr Grand's point, there would have been evidence that would have shown a reduction in the occurrence of assaults, but the population attending those areas was reduced by close to 80 per cent. With that fewer people, then it is naturally going to happen.

CHAIR: Do you attribute the probably undeniable reduction in violence in Kings Cross to the same factor, that it was just fewer people, therefore you will automatically will get fewer assaults?

Mr Prior : Not necessarily. I think the percentage reduction over the last decade and the rate of that percentage improvement has not necessarily increased during this last year and a half to two years. If anything, it is actually probably a little lower as a percentage reduction. I think the statistics that Mr Grand was talking about before show a reduction in Kings Cross for the decade in the 30 per cent.

Mr Grand : BOCSAR statistics say 'Kings Cross' so I am assuming that it is Kings Cross local area command, which includes all of the suburbs. From April 2007 to 2012 the reduction was 37 per cent versus the Sydney local government area of 11 per cent and New South Wales on nine per cent. With the actual cooperation between the agencies, police, game and racing and the venues, it was in a downward spiral. There were a number of things that did not happen in Kings Cross that were approved by government along the way that we think would have helped, but it just did not happen.

CHAIR: I guess my question to you—and Mr Lazarus was nodding while Mr Prior was disagreeing—

Mr Lazarus : I was nodding that assaults are down because patronage is down.

CHAIR: That was my question—whether you think that is the cause. St Vincent's Hospital, for example, have put in a submission pointing out that there are fewer people admitted to the hospital. They draw all kinds of conclusions from that which are somewhat flimsy. But your argument, I think, would be that, inevitably, if you get fewer people, you will get fewer assaults. It just follows. If people are not coming here, everything flows from that.

Mr Grand : But you still do not get rid of that small percentage that is going to cause you that violent problem. From that, if you look at the Kings Cross Plan of Management, which we believe was working without the lockouts, on licensed premises the reduction in the first year was 21 per cent, which is a big lump. It went from 142 in the second year of the plan of management down to 103, another 27 ½ per cent. Then, with the introduction of the ID scanners, it has dropped 19 per cent. But, when you look at it in actual raw numbers, you are talking about a drop from 103 down to 83. You are still always going to have that percentage of people that are going to cause a problem, whatever you do.

CHAIR: So what you are saying is that the people who would have been excluded under an ID system are still coming to Kings Cross, still causing trouble?

Mr Grand : We believe it has been a big improvement for the public domain. If you look at the first two years of the Kings Cross Plan of Management, where the premises were dropping 21 per cent and 27½ per cent and a further 19 per cent, in the public domain the drop was only 7½ per cent and three per cent. But, in the third year, when the ID scanners were introduced, it was 45 per cent. You can compare that to the CBD stats, which I have got here and I am happy to read out. The CBD on-licensed-premises versus not-on-licensed-premises percentage reductions are on par. So we believe the ID scanner has been very effective. It has stopped some people visiting too, and it has actually cost the venues money. It costs $2½ million per annum for these venues to operate these ID scanners. It is not cheap. But it also makes people more responsible because their details are recorded and their photo is taken—it is a live photo. It obviously stops some people coming too, because they know they can be tracked.

Senator DASTYARI: Mr Grand and Mr Prior, I just want to understand what you are effectively saying. I will paraphrase it to see that I am actually understanding what you are saying. You are saying effectively, yes, incidence is down but that was always going to be the case when you had such a large reduction in traffic.

Mr Grand : Correct.

Senator DASTYARI: You are also saying that, in your opinion, there were other and better ways of achieving the social outcomes that were wanted, without having to shut down the foot traffic.

Mr Grand : Correct. If you look at the actual police union statements, and also Professor Peter Miller and Kypros Kypri, they are basically saying that the most effective measure is the cease-service provision. If you look at the Kings Cross Plan of Management stage 1, which reduced the trading hours from some premises—not all, because some were closing at three o'clock or two o'clock anyway—the 6 am closures or the 24-hour venues then closed at 4 am, and we got big reductions immediately. Obviously the St Vincent's data was starting to drop from that point. There are a number of things that we believe have worked. If you add the ID scanners to the cease-service, we believe they are the most effective measures. You did not need the lockout.

Senator DASTYARI: What was the social objective? The social objective was preventing antisocial behaviour and violence. I think, Mr Grand, you worded it as 'a few people ruining it for everyone else'. I think they were your words, and that is probably an apt way of putting it. But, to achieve that, you have effectively shut down Kings Cross. I was born in a small town in northern Iran. In Iran we do not have any incidents at bars at 1.30 am, in part because it is illegal to drink alcohol. But the point you were making is that that is not necessarily the solution. There are better ways or other approaches that should be looked at.

Mr Grand : Absolutely. I have been reading reports recently which are saying that since the introduction of all the restrictions across the CBD, Kings Cross and Oxford Street there has been an increase in drug taking. If you look at the reports they are saying there has been an increase in drug taking over a period of time. We do know that here at Kings Cross, the detainees at Kings Cross or the people who are charged at Kings Cross Police Station have the highest rate of having amphetamine substance in their system of anywhere in Australia—64 per cent.

The issues for licensed venues are—and it does not matter what time of day it is—(a) if they have been prefuelling and are slightly intoxicated or (b) if they are on a substance. It is very hard for venues, and that is continuing. There was an incident where one of the venues here had a girl who was actually in a very bad way after 15 minutes of being in this venue. They tracked the girl from entry, via the CCTV. She had half a drink and she was in a bad way, but when she was in the line to get in she was perfectly fine. Those are some of the issues that are very hard to resolve via these blanket restrictions.

CHAIR: What I would like you now to do is to step back a little from some of this detailed stuff and talk about what Kings Cross is like now of an evening. Can each of you describe in your own words what it is like there now. I am a little bit too old to go wandering around in the wee small hours of the morning, so I require a description.

Mr Prior : It probably depends on which time of the evening you refer to. I think up until 10 or 11 o'clock at night it is not too different. People are still using the place in a generally similar fashion—they are commuting, walking through the precinct, maybe using some of the retail outlets and eating and drinking in establishments where they can. That part of the night is reasonably unaffected.

Post 10 or 11 and into the later hours—particularly towards the weekend, as we have already spoken about—it is clearly very different. There are a lot fewer people about. So where you might have been out at about 1 am on a Sunday morning or Saturday night there would be a lot of people, now it is not uncommon to have no-one on the streets at one to 1.30 in the morning. I think it is in that later trading piece, but perhaps there is something different someone could comment on. We are still here trading through that period and enjoying reasonably consistent trade of an early evening.

CHAIR: Would you like to describe it for me, Mr Jank?

Mr Jank : I am similar to you. I do not tend to frequent late night venues. I worked in Woolloomooloo eight years ago—I started down at The Old Fitzroy. This was a vibrant area. We used to come up here and it was absolutely wonderful. I think forwards from when Kings Cross was temporarily shut down to be relaid with new footpaths, I think that was when businesses started to struggle.

Mr Prior : If you do spend some time up here there are very distinct areas. Bayswater Road, Darlinghurst Road and Macleay Street are poles apart. Macleay Street is reasonably healthy and thriving. It is very food-orientated, and it is a great area. The area from The Bourbon Hotel and the fountain through to Bayswater Road is where a lot of the damage has occurred. That is where a lot of those later trading venues, which may not have opened until 10 o'clock at night, were based and a lot of those no longer exist.

CHAIR: How many have closed?

Mr Prior : Of the licensed venues, about six or eight.

Mr Grand : It is 12 now.

CHAIR: Twelve licensed venues?

Mr Grand : Some of those boutique nightclubs were operating for 25 years. It is quite devastating.

Mr Prior : All up there is a figure of 30-odd actual businesses that have closed.

CHAIR: When the major late night venues have closed, is there an impact on other businesses in the area?

Mr Grand : One in mind is Hugos Lounge, which at its peak was employing 170 staff and had a business valuation—I am sure they will not mind me saying because I actually had a chat with them about it previously—of $20 million. It is now down to probably 25 per cent of that valuation. With the staff and entertainers that they would employ, we believe the actual direct employment was above 500. Those people would have lived in the area and they would have gone to local cafes during the day and they would have fed the local businesses. So removing them has absolutely had an effect.

CHAIR: So the knock-on effect, if you like, is due to fewer employees spending their money in the area, rather than people not going to a convenience store at 1 am or 2 am.

Mr Grand : Sure. Anthony is right. Look at Kings Cross. People say it has changed, and there are seeds of improvement, but it is still that actual zone of streets that are really struggling from this.

CHAIR: Okay. Mr Prior, you mentioned the probity issues that delayed the introduction of ID scanners. What were those probity issues?

Mr Prior : Doug probably can talk to it better because he was liaising more with the government on the topic.

Mr Grand : The Kings Cross Licensing Accord, with an independent observer from gaming and racing, were tasked to run a tender for the ID scanners. We had to look at the actual performance and cost of those scanners to the venues, which we undertook and we made a recommendation. Our actual recommendation to government was that there was a probity issue. I believe it was under the Liquor Act and a close association. It might have been from one of the directors of the company. So we were then asked to make two more recommendations, which we did. We believe both of those failed probity as well.

As far as the Accord was concerned, with the independent observer there we performed our function. In hindsight, it would have been better if the probity had been done on the companies prior to us evaluating what was being done. That is what they have actually done in Queensland—they were going through the probity side before companies were being accepted. So that created a delay. The government took over the tender and then it was introduced in June 2014.

CHAIR: The issue was the links between the companies tendering for the ID scanners and the process of choosing who—

Mr Grand : Correct.

CHAIR: choosing which one was going to supply it?

Mr Grand : Yes.

CHAIR: These ID scanners are different from what the registered clubs use, are they?

Mr Grand : They are different in the fact that registered clubs generally stand-alone, so they have a different requirement for their membership. The one that has been installed in Kings Cross complies with privacy which is the whole issue—it is cloud based, so to protect the community there is no information held on any individual premises.

CHAIR: Understood. Mr Jank, your submission describes Sydney's drinking culture as 'juvenile'. I am not disagreeing with you, but I would like you to explain that.

Mr Jank : I think there is a tendency to overconsume and it is a problem. But it is held in check by laws that continually push people around and force them to consume faster than they otherwise would.

CHAIR: So you think it is a consequence of the laws rather than a cultural thing.

Mr Jank : Unless it is a cultural thing, and I have heard that argued. There is almost a racist idea that Australians are sillier and more irresponsible but, on the whole, I cannot really accept that.

CHAIR: Have you had any experience of Melbourne's culture?

Mr Jank : Yes, of course.

CHAIR: How would you compare it to Sydney?

Mr Jank : It is undoubtedly more open. It is had a lot more time to develop as well. In Sydney, we have not fully taken that avenue yet.

CHAIR: Your argument of multiple small venues seems to be a more accurate description of what occurs in Melbourne.

Mr Jank : Absolutely.

CHAIR: Do you think that is a factor or are there other factors?

Mr Jank : I would say it is, in large part, yes.

CHAIR: How do the lockouts and the other restrictions in Sydney prevent a similar culture from emerging?

Mr Jank : My issue is with the movement of people against their will between areas. At midnight in any given local area, people are asked en masse to leave. As far as the lockouts go, we used to send people to Kings Cross. Redfern is a microcosm of probably 400 patrons at midnight. We used to send them to Kings Cross, absolutely, but now everybody goes to Newtown. I think it is important that people who intend to go to entertainment precincts do so, but with those who do not want to and are being forced to late at night I think that is where we start to see increasing problems.

CHAIR: What is the advantage of maintaining Kings Cross as an entertainment venue? If Melbourne does not have the equivalent of Kings Cross—it used to be said that St Kilda might have been—

Mr Jank : Once upon a time.

CHAIR: But I do not think that is said anymore. If Melbourne does not have the equivalent of a Kings Cross—I am playing devil's advocate here—what is the disadvantage of Kings Cross turning into a residential suburb and having multiple, diverse centres around it?

Mr Jank : I think a late-night entertainment precinct is essential for an international city to exist. It is expected, and it is embarrassing not to have one.

CHAIR: Apart from the embarrassment factor, are there any other practical aspects?

Mr Jank : I think we are dealing with a changing population as well. We are dealing with a population that is growing, and I think there is an expectation to be able to do 24-hour things in a large, modern city, yet we are shrinking our late-night economy.

Mr Prior : In Melbourne there is still a mix, in most precincts, of early and later trading venues. You can choose to go to Prahran, St Kilda or whatever suburb you like, and you can probably have a choice of late trading venues to go to that might trade till all hours. So you are restricting the choice in Sydney to go to any precinct that has a blanket lockout. In Melbourne there is probably a bit of a coexistence culture of residents, retail and venues. I was down there recently. In Prahran there is a nightclub on the main strip, and there is a hotel across the road, and there are residents across the road as well, and they all seem to be existing in a fairly comfortable state. Up here closing the venues so that the residents can potentially move in is the tone.

CHAIR: Do you think there is a case for Kings Cross remaining the principal late-night venue in terms of controlling antisocial behaviour? If there is going to be antisocial behaviour, it will occur in Kings Cross. Therefore you can commit police and law enforcement resources to deal with the individuals who get involved in it.

Mr Prior : That would not be the right approach as far as I am concerned.

CHAIR: You do not like that idea?

Mr Prior : I like the idea of the venues having safe, well-controlled environments and the streets being managed wherever you might be at an appropriate level. There is a place for people in the CBD, and in Newtown and other suburbs for that matter. Kings Cross at the moment is negatively and unfairly unable to enjoy that as well.

CHAIR: If you go back, as I said, to the Vietnam War days, when the American troops were doing their R&R here, it was undoubtedly the naughty suburb of Sydney at that point. My impression is that it was no less a late-night suburb in those days than it was prior to the lockouts. Do you have experience of that at all? Do you have any evidence to confirm or conflict with my impression?

Mr Grand : No. Obviously then it was a little bit different because there were all the accommodation hotels as well, so there were people being fed into the local economy on a daily basis, but there were always late bars all around Kings Cross, and the City for that matter, where you could drink till six in the morning.

Senator DASTYARI: I have a follow-on question on that. The bit that I do not get about all this and that confuses me is that I do not see how any of this addresses the underlying issue. I know that Mr Jank in his submission outlined it; I think you said that the root cause is binge drinking and social violence, which effectively come hand in hand. I think the point that Mr Prior was making was tied into that: there is a drug culture as well which is very hard to determine. You can look at someone and you sometimes do not know if they have had a few drinks or they have taken drugs. Unless you are going to sit there and give them a blood test, you do not know what is actually happening.

The response of simply saying 'We will shut down these venues' does not seem to get at the cause of why the venues themselves would need to be shut down. If the cause is a handful of individuals behaving badly, I just cannot see an explanation—I guess we will ask others about that today—for how that underlying problem, that social problem, is going to be addressed by simply saying 'People can't congregated together at one and two in the morning.'

Mr Grand : As I say, the majority of people are not violent. Venues are not violent. Violence is bad for business. If you look at the two incidents that caused this, really, for Kings Cross, I think the first person was on his third or fourth good behaviour bond. The second person, who obviously did the second king hit, was on his fifth good behaviour bond. He also had other charges pending for assault of his girlfriend and for carrying offensive weapons. The incidents were at nine and 10 o'clock at night. The hard thing for people who have been in business for 25 years and who have invested their whole life into something is: how can that incident—which they have got no control over, which maybe should have had a stronger intervention from higher above—affect my livelihood?

Senator LEYONHJELM: How would ID scanning have changed that situation?

Mr Grand : Certainly, with the first one, it would not have, because I believe he was refused entry to at least two premises. He did not gain entry. In actual fact, with the first one, Loveridge, it was said that he had consumed at least half a case of Smirnoff Double Black on the way into Darling Harbour. He had had a drink at Darling Harbour and had come up to Kings Cross. He was refused entry into two premises and then he basically king hit five people over a period of 45 minutes or an hour.

Senator LEYONHJELM: So it was all on the street.

Mr Grand : It was all on the street.

Senator LEYONHJELM: Limitations on the premises would have made no difference.

Mr Grand : Correct.

Senator DASTYARI: You could argue that someone with that kind of violent behaviour, who had previously, through this card system, been banned entry into venues, may have chosen not to go to Kings Cross.

Mr Grand : Correct.

Senator LEYONHJELM: Yes.

Mr Grand : Again, the one thing about the ID scanners, which we wanted and which the police support and which we absolutely support, is that they can effect street bans now by an iPhone so that if someone is playing up in the street in Kings Cross they can be banned from entering those venues before they even try to get to them. What they get then is a $550 fine and a move-on order. But we believe, too, that there should be further interventions with those fines being issued for maybe community service or whatever, which may stop someone else being king hit in the future. We believe that the $550 is not enough.

Senator LEYONHJELM: You referred to the first incident. What was the second incident?

Mr Grand : With the second incident, I am not exactly sure. It was between nine and 10, I believe. That person had a terrible history of violence. I am not sure that he was definitely in a bar in Kings Cross, but it was on New Years Eve and it was early evening. Again, it was on the street and in the same spot that the first occurred.

Senator LEYONHJELM: Your argument would be that, with ID scanning, you would hope that he would show up on the radar. If that were the case and he knew he was going to be denied entry, he would not come to the area in the first place. So, hopefully, he might stay somewhere and get less fuelled up. If he did not show up on the ID scanner, a lockout would not have changed anything anyway because it all occurred early in the evening. That would be your argument.

Mr Grand : Correct.

Senator LEYONHJELM: We are going to let you go in a moment, but I want to get your reactions—all of you, if you are interested in discussing it—as to why the residents association of Kings Cross—they are talking to us after lunch—have said that they think this lockout is wonderful. Life is suddenly a bowl of cherries to them. Why would that be?

Mr Grand : The 2011 Residents' Association and DRAG, the Darlinghurst Resident Action Group, have basically been espousing for the closure of premises for the last decade that I know of. I attend CSPC meetings at the police station on a quarterly basis. It was made very clear at some of those meetings that they wanted midnight closing then. We are talking about a decade ago. So it does not surprise me. A lot of these are older residents. Again, they would prefer more of a residential zone than an entertainment zone. So it is that clash of culture between those two.

CHAIR: Presumably, they bought into Kings Cross and established King Cross as their home at a time when Kings Cross was the late-night entertainment centre of Sydney. They would have to be pretty old to have bought in before that occurred—a damn sight older than me. It seems to me that they are asking for something that never occurred.

Mr Grand : Even with the residents associations, the issue for all of us is that the catchcry is 'lockouts'. Actually, there are a raft of things in place that we believe work without the requirement of lockouts. So they can still be harmonious, but the explanation of it and the media reporting of it need to be improved.

Senator DASTYARI: Mr Grand, I want to go back to this. We are where we are. I think we are coming on to two years now, or I think it is—when did they actually come into place? Was it Christmas 2014?

Mr Grand : For Kings Cross, the Kings Cross Plan of Management Level I was in December 2012. Level II was December 2013. Lockouts came in in February 2014. Then the ID scanners came in in June 2014.

Senator DASTYARI: So you are saying February 2014 was when the lockouts came. The most significant part of the area of business was that, obviously, the lockouts had a greater impact than any of the other. That is what your information says—correct?

Mr Grand : Yes.

Senator DASTYARI: You were saying earlier that you think it is time for a proper review. Can we touch on that?

Mr Grand : When the first bill was passed, the then minister, Minister Souris, said—and if you look at the Hansard report—this would be reviewed regularly. And it just said 'as required'. Again, I think it comes back to the point that Andrew and Anthony made: we do not believe this was ever meant to destroy business, but they were looking for the right balance to put in place. We believe if it was reviewed on a fully consultative basis and on a more regular basis, it would have been far better for business and community.

Senator DASTYARI: You are pretty much saying: now that it has been in place for almost two years—or, by the time anything happens, we are going to say it has been in place for two years—there has been a series of unintended consequences and it is time now for us to actually review that and review the unintended consequences and to ask ourselves the fundamental questions of what the point of these laws was and whether they have been able to achieve it. Now that we have things like scanners and other methods, you are asking whether we have the opportunity to ease or lift some of these restrictions.

Mr Grand : Correct.

Mr Prior : It is not with the intention of winding back to that period. Everyone accepts that the way forward is about establishing precincts that are safe and operate in a fun and tidy way. The Kings Cross of the future can have a mix of food and small-large later trading venues that all have the right intention and work as a group together—fantastic. In Newtown, where it started to become public a few months ago about the displacement consequences, Newtown local businesses took very quick and swift action to make sure that potential similar situations did not transpire. So they put some voluntary measures in place within a month or two of certain media and certain statistics starting to show up to make sure that that did not happen and that they did not get to a place where it was going to be—

CHAIR: What were they?

Mr Prior : The voluntarily put in a self-imposed lockout at 3 am.

CHAIR: But they did not put in ID scanners?

Mr Prior : No. But, at the same, they have said, 'If you are coming to the precinct with the right intention, we will work with you.' So you can make a booking to go to a venue, be known to the operator and know what the intent is. They are just trying to stop people from suburb hopping and turning up when they are already fuelled.

Senator DASTYARI: You do not want people showing up until they get drunk.

Mr Prior : You can go out, have a cigarette and come back in, if you have already been in the venue, because we know who you are and we know that you are not anything apart from someone who wants to be here and enjoy the good measure. So the intent of the lockout is to say, 'Do not come to this suburb pre-fuelled and think you are going to come in and run amok.' That is a great message to be sending; it is not everyone having to take the lockout on the chin at the time where you are normally used to enjoying the good measure.

Senator DASTYARI: Just to be clear on what you just said: you are saying that while you think it is worthy and of value to do a review, it is not necessarily with a view to going back to where things were in the past. It is about getting the balance right?

Mr Prior : Yes.

Mr Grand : Kings Cross is on the move. Like I said, it is happening organically. Without a certain strategic plan the developers are moving in and the residential developments will continue to happen. We welcome them, to be honest. It is happening and that is part of the future. There are residential developments in other precincts happening all the time—you work with that and you keep moving. It is just: what is the plan, how does business become sustainable and how do people still be able to choose to go out and have a good time? Where? Why not Kings Cross over that other suburb, if this is the future?

CHAIR: My personal view is that if we are going to have a naughty suburb then Kings Cross ought to be our naughty suburb. It has been our naughty suburb for many, many decades. As Mr Jank or Mr Lazarus said, an international city needs a naughty suburb and Kings Cross is probably the one that has earned the right to be it, having been in that position for a long, long time. I guess it depends on what you mean by 'naughty'. If you do not have anything else to say, we will let you go.

Mr Prior : Not at all.

CHAIR: Thank you so much for coming along.