PubTIC has been investigating one of the biggest questions in Australian pub real estate with the Office of Liquor and Gaming Regulation: why do pub transfers take so long in Queensland?
The OLGR reports transactional activity has been high in the Sunshine State, finding a 12 per cent year-on-year increase during FY22 in the number of transfer applications received.
The Office says the majority of all liquor transfers, which includes those associated with gaming, “were completed in less than seven weeks”.
The regulator also reports that it can generally issue an interim authority within 2-3 days, if all requirements are satisfied, allowing “the licensed premises to continue to operate while the application for the transfer of the liquor licence is being processed”.
Transfer of ownership of gaming machines in Queensland involves a new application and is a separate process to the transfer of a liquor licence.
As per the Gaming Machine Act 1991, an assessment is carried out as to the financial stability and general reputation and character of the applicant and each executive officer or associate – however, OLGR says its scrutiny exceeds the obligations imposed under the Liquor Act.
Where concerns are identified, and/or where the applicant has a complex operating structure, the assessment process will take longer, but if all information is lodged and no issues identified, OLGR says “most applications to transfer a liquor licence take about 2 months”.
In response to questions, OLGR confirms it does not undertake new suitability checks into directors, shareholders or associates where such parties are already known to it, and will transfer a licence based on the “established suitability” of a known licensee entity, even when the assessment of the new individuals’ suitability has not been completed.
PubTIC has spoken to multiple publicans and parties experienced in the workings of Queensland liquor licence transfer, and while none wanted to be named as complainants, the consensus was that any buying or selling a pub in Queensland is “ridiculous”.
“It is literally a three to four-month process – minimum.”
It’s suggested that in something like nine out of ten transfers the directorships or shareholders haven’t changed – and yet, established publicans and entities posting the same directors say it is no quicker for them to get approved than anyone else; a process they believe should be an automatic ‘tick and flick’.
OLGR suggests processing delays occur primarily because “the applicants do not provide complete or sufficient information” – yet this would surely not be relevant with current operators taking on going concern businesses.
Even ALH, Australia’s largest publican, is subject to a three-to-four-month transfer time for approvals.
By way of comparison, a licence transfer through Liquor & Gaming in NSW can be executed in a few weeks. The process does not require a separate application for gaming entitlements, which are attached to the liquor licence and transferred with it, thus reducing the checks required.
Queensland, with its policies exceeding that required by the Gaming Act, requires the separate transfer and “a more complex regulatory process”, although its understood transfer applications involving gaming in Victoria are similar to those in Queensland.
Operators stress that “a lot can happen” in the several months waiting to change hands, and much can be done to a business in that time; everyone is “on hold” and vendors battle to keep staff motivated, as they fear for their jobs and keep one eye on other options.
In contradiction to the Regulator’s suggestion that its Interim Authorities are “used by a large cross-section of applicants” and “were sought and approved for a large majority of all applications processed”, none of our sources had ever used one, and only one had heard of anyone using one.
These Interim Authorities were set up to cover the situation of a defaulting tenant or mortgagee, allowing a bank or landlord to step in. They are typically not acceptable to financiers, who won’t release funds until security over the bricks and mortar is firmly in place, after settlement.
ALH, even with its deep pockets, reportedly do not use and are not prepared to take over a pub under an Interim Authority.
OLGR also offered suggestion that transfer of the land title was a factor in the long lead time, but several publicans, themselves also residential property owners, suggested that if this was the case it would affect every property in Queensland, which they attest it does not.
In 2019 OLGR conducted a review to identify general impediments to the efficiency of licence transfers, identifying that “a high proportion of delays were attributable to applicants” and the most common issues being incomplete forms and a lack of supporting documentation.
Improvements were introduced in 2020, aiming to educate applicants to lodge more detailed submissions, but also to improve OLGR’s internal governance and management of the transfer process. Further improvements were made in March 2021, giving greater autonomy to processing officers, allowing applications to be expedited.
But work remains to be done.
“The OLGR is in the process of reviewing the implementation of these process changes to identify whether further opportunities for streamlining can occur.”