GO
Loading...

Will Australia's binge drinking clampdown quell industry?

A crackdown on alcohol-related violence in Australia's most populous state, which will enforce earlier closing times for liquor stores and nightclubs, is only likely to have a minor impact on Australia's night-time economy, analysts told CNBC.

Following growing public angst over a series of unprovoked assaults – known as one-punch attacks – policy makers have introduced a series of measures to try to control binge-drinking related violence in New South Wales. Liquor stores statewide must now close at 10pm and nightclubs and bars in Sydney's city center and Kings Cross are banned from allowing entry after 1.30am and from serving drinks after 3am.

(Read More: 2014 a 'litmus test' for Australia economy: Goldman)

"These rule changes are mainly specific to Sydney and are unlikely to have any kind of major impact on the services sector," said Evan Lucas, strategist at trading firm IG. "It's more about curbing the issues around binge drinking. I can't see any major economic impact."

The curbs come at a time when many economists are worried about Australia's growth outlook. The so-called 'lucky country's' mining boom is widely perceived to be over, and the nation's central bank has been forced to cut interest rates eight times over the past few years in a bid to stimulate other parts of the economy.

(Read More: Australia's inflation spike creates dilemma for central bank)

According to an article in The Telegraph, the Australian Hotels Association said the lockouts and closures will have an "undeniable impact" on the night-time economy, penalizing well-run businesses that have nothing to do with the violence.

However, according to Rob Moodie, professor of public health at University of Melbourne, the curbs could actually give the services sector a boost if a safer environment encourages more Sydney dwellers to go out at night.

Furthermore, the overall economy could benefit from reduced pressure on the police and emergency services, he added.

(Read More: Has the tide turned for corporate Australia?)

"We've seen from when these rules were introduced in the state of Newcastle in 2008, they've been effective in reducing alcohol related assaults by 35 percent, which has been maintained over the subsequent five years. A lot of people don't feel safe going out, this is the right thing to do to make Sydney a safer place. Perceptions are important," he added.

"The same thing happened when smoking was banned in pubs and clubs. People worried that business would lose customers, but instead the people who avoided these places due to the cigarette smoke, started to go out more, offsetting the impact," he said.

Jetta Productions | Iconica | Getty Images

Moodie added that the number of businesses affected was so small in relation to the overall hospitality sector, the impact was likely to be minimal.

"There is a very small percentage of Australia's total liquor stores, bars and nightclubs, that trade to 5am to put this into perspective. And we know that businesses are able to adapt rapidly to new regulations," he added.

Shane Oliver, head of investment strategy and chief economist at AMP Capital, also said the city's services' sector shouldn't see much impact from the new measures.

(Read More: Another reason why Australians are lucky)

"Earlier closures might have a bit of a negative impact initially but if its seen as making it safer to go to pubs and nightclubs then over time it might encourage more to do so. So I wouldn't expect to see a major impact," he added.

The unprovoked attacks, now known as 'coward punches' on unsuspecting citizens, have sparked a media frenzy in the country, following two deaths, the most recent being 18-year old Daniel Christie who died last week after being knocked unconscious by a single punch in Kings Cross, a popular nightclub district in Sydney, on New Year's Eve. 18-year-old Thomas Kelly died after he was assaulted in Kings Cross in July 2012 .

The measures include a mandatory eight-year jail sentence for those found guilty of fatal one-punch attacks.

By CNBC's Katie Holliday: Follow her on Twitter @hollidaykatie

Contact Food and Beverage

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More*