The Otago University student associations says the price of alcohol is putting students off drinking at bars.
They say the problem could be solved if the alcohol excised tax was changed with a lower level for on licensed alcohol.
President of hospitality New Zealand Mark Scully says the basic idea around safety is good.
"Most people agree with the sentiment that it would be great to see the students drinking in bars, and we've always advocated the fact that they're a safe environment."
Scully says the move would also be more fair for the publicans.
He says the current excise tax system leaves them at a disadvantage compared to outlets like supermarkets.
Scully says if somebody could come up with a good tax system across the whole industry - then good luck to them.
Otago University Students' Association president James Heath says pubs like Starters Bar, which OUSA owns, are safer, supervised drinking environments than unregulated flat parties.
But he admits the price of alcohol at pubs turns students away.
LISTEN TO MARK SCULLY TALK WITH MIKE YARDLEY ABOVE.