A risk-based licensing regime for liquor venues began in NSW this week, with venues that trade after the 1.30am lockout paying twice the annual fee, or $5000, for a base licence.

But the Liquor Stores Association and Woolworths had complained in a submission to the Harper review that the licensing system is anti-competitive. Bottle shop chains pay $1500 more per licence than small business owners. There is also a freeze on new liquor licences in the Sydney CBD, while bottle shops face 10pm closing times.

The last time a national competition review was held, NSW liquor laws were deemed anti-competitive in 2003, and the NSW government lost a $12.9 million payment from the Commonwealth. The Carr government responded by abolishing the "needs" test for new liquor licences, fuelling a boom in bottle shops.

"If NSW were to buckle again, we would be exposing young people and the disadvantaged to a whole new range of harms," said Greens upper house MP John Kaye. "We are struggling to get the problems associated with alcohol under control, and are slowly getting a consensus. Then enter, stage right, comes the competition review."

Police Minister Troy Grant holds responsibility for liquor laws in the new-look Baird government.

"Our laws are not anti-competitive but rather pro-community," said Mr Grant's spokeswoman.  "The NSW government has implemented a number of measures to strike the right balance between industry and community responsibility."

The Harper report said the risk of problem drinking to communities was a clear justification for regulation, but some liquor regulations didn't appear to be based on public benefit.

Convenience stores wanted to obtain liquor licences but couldn't, and one NSW company had questioned why a liquor licence applicant had to have tenure of a property.

The report said state liquor regulations should be reviewed "to ensure they are meeting their stated objectives at least cost to consumers and are not unduly restricting competition".

Mr Kaye said: "I have difficulty with 'not unduly restricting competition' being a catch-all to open the floodgates to more liquor outlets and diverse types of outlets."

A spokesman for the Office of Liquor, Gaming and Racing said the annual licence fee scheme and licence freeze are harm-minimisation measures, and it "remains of the view that these laws go a long way to achieving the right balance between industry and community interests".

The Harper report received a large number of submissions expressing concern that changing alcohol laws could increase social harm.

The panel said it agreed with the argument put forward by public health groups that alcohol was not the same as cornflakes.

This is a rebuff to Woolworths, which has repeatedly argued in government submissions that alcohol discounts are like promotional offers on cornflakes.