AbstractThis article examines critically the present structure of regulation of the liquor industry in Victoria. This is a mixture of detailed regulation of liquor supply conditions through the licensing of outlets and of taxation and other regulation of consumption activities. It examines the justification for regulation in some form which derives from socially harmful consequences of alcohol consumption such as drink driving and nuisance actions. The present controls are seen to be largely ineffective because they are not targetted closely to the activities which cause social harm. Substantial changes to the licensing system and other policies are recommended.