From the time when Victoria separated from New South Wales down to 1876, a decidedly retrograde policy was adopted; licence fees were reduced, grocers' licences introduced, and beer shops legalised. But in the last-named year the liquor laws were amended by a measure giving limited local control over the traffic; and in 1882 a further Act was passed by which the local powers were considerably increased. Under the present law one-fifth of the electorate in any district can petition the Governor in Council to hold an election to settle the number of public-houses to be permitted there, and he is then obliged to cause a popular vote to be taken on the question. Each elector states on a ballot paper how many hotels he wishes to be licensed, and the number named by him must be the number then existing, the statutory number, or some number between. The statutory number has been fixed at one for every 250 inhabitants up to the first thousand, and one for every full 500 beyond. Where the number is greater than this it can be reduced by a poll to that limit; where it is less, it can be raised in a similar way up to it. But in no case can the number be reduced below or increased above the statutory limit. In arriving at the decision of the electors, if a majority vote for any particular number then that number is carried. Where, however, the votes are so scattered that no particular number commands a majority over all the others the following plan is adopted. "Suppose a district with 48 hotels, and 12 as the statutory number. Suppose, further, that 600 votes be recorded, of which 250 are for 48, 200 for 12, 20 for 13, 20 for 14, 20 for 15, 20 for 16, and 21 for 17. The votes given for the higher numbers would be added to those given for 12 until they made a majority of votes recorded. In this case by the time the number 17 is reached, there would be a total of 301 votes, making a majority of the 600, and the determination would be that the hotels be reduced to 17."[7] Where the electors decide in favour of a reduction, a licensing court sits and decides what houses are to be closed. The licensing inspector has to summon all the hotel-keepers before the court, and the court selects the houses which are worst conducted, or which provide least accommodation, as the ones to lose their licences. The houses which are thus closed are given a monetary compensation on account of the annual value of the premises being lowered: the exact amount of the compensation is fixed by two arbitrators, appointed one by the owner and another by the minister. In case these cannot agree a county court judge or police magistrate is nominated by them as umpire. The whole of the compensation money is raised from the "trade" itself, by means of increased licensing fees and penalties for breaches of the liquor law. If these amounts are not sufficient, a special tax is imposed on liquor in order to meet the deficiency.