One of the key functions of Government is to create policies that support strategic objectives. For example, central Government has introduced several policies aimed at cooling the Auckland housing market, while many Councils have introduced policies to promote a compact urban form.
A critical part of the policy formulation process is to identify likely effects on key sectors of society. However, this can be difficult, particularly when a policy is part of a wider suite of measures. Another complication is that the effects of a policy will often depend on the way that people react to them, which can sometimes be difficult to judge in advance.
This is where economics comes in. It provides a set of tools and techniques to help analyse the impacts of policies based on the likely reactions of both consumers and producers. As a result, it enables more informed policy decisions to be made.
Case Study: Auckland Local Alcohol Policy
In 2013, the Government passed legislation enabling Councils to adopt Local Alcohol Policies (LAPs). In 2014, Auckland Council adopted a draft LAP which, amongst other things, set maximum trading hours for off-licenses and on-licenses across the region.
We were commissioned by the Auckland branch of hospitality NZ to analyse the likely effectiveness of the Council’s draft LAP (taking into account likely reactions, particularly by younger people). Our research clearly showed that the policy would have little (if any) impact on alcohol-related harm, but could seriously undermine the financial viability of late night venues. Accordingly, we recommended that the Council refrain from reducing the trading hours of on-licenses.
The results of our research were later presented in person to a Council hearing, which was very well received. As a result, the Council abandoned its plans and adopted most of our recommendations instead. You can read our report here [download]
Other Recent Projects
Other policies that we have recently helped analyse include:
- Local alcohol policies in Christchurch (for the Council)
- Class 4 Gambling(pokies) in Christchurch
- Genetically-modified organisms in Hastings