How much does a community get for having an alcohol monopoly?

Wednesday, 4 July 2018

Only The Trusts can run pubs and sell alcohol from bottleshops in West Auckland.

West Auckland's licensing trusts gave back a quarter of its profit in the past financial year.

The Trusts has been under pressure from those trying to force a referendum on its bottle shop and pub monopoly in the area.

Chief executive Simon Wickham said it did not give all the profits away so it could invest money back into the business as it also squirrelled away a large nest egg.

An exclusive look into The Trusts' financials show the group had a net profit after tax of $4.5 million for the year to March 2018, of which it donated $1.13m to local community groups.

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Its cash and diversified investments now totalled $68m.

The reason for the nest egg was that if another financial shock hit or if gaming legislation was changed to outlaw pokie machines, then West Auckland community groups would find their funding drying up, he said.

The Trusts aimed to grow its investments to $223m by 2030, which would enable it to give back $5m each year, irrespective, he said.

West Auckland Licensing Trusts Action Group spokesman Nick Smale said he was not a fan of licensing trusts having a large investment portfolio that was unrelated to the general business of selling alcohol.

'We are basically starving the community today for returns in the future. And that's not necessarily a great strategy,' he said.

'And in the bad times, is it right that that investment portfolio effectively subsidises a booze and gambling business?'

Wickham said that when the investment strategy started back in 2012, the idea was not to shore up The Trusts in case of the public voting them out.

He had just been made chief executive, and the business was then giving away less than $100,000 a year at the tail end of the Global Financial Crises.

'At that stage all our property was tied to retail stores and hospitality venues, and all our profits were tied up in retail stores and hospitality venues.'

Now 28 per cent of its income was coming from investments, he said.

The Trusts has budgeted to give back $2m this financial year, and this was planned to be $3m a year by 2019, and $5m a year by 2025.

Gaming machine takings from The Trusts' venues has been decreasing over the past five years, and was $9.4m for the year to the end of March 2018.

Of this The Trusts Community Foundation (TTCF) distributed $4.6m back to charities and community groups, and up to $1.5m was given back to The Trusts in venue payments.

The Trusts owned only eight of the 49 gaming venues run by TTCF.