It also recommends the trading hours for bottle shops be extended from 11pm to midnight from Monday to Saturday, and to 11pm on Sunday.
“Safety and a vibrant night-time economy should not be, and are not, mutually exclusive,” NSW Liberal MLC and committee chair Natalie Ward told reporters.
“We believe we can continue to maintain and in fact increase safety while we also reinvigorate Sydney’s night-time economy.
“It’s now time to take stock and take proactive steps.”
The report found more work was required in Kings Cross to ensure safety, with the district requiring a “specific, nuanced approach”.
It says the repeal of lockout laws in Kings Cross, without additional improvements to lighting, street layout and venue density, would prompt a return to excessive alcohol consumption and violence.
A “pathway” program was recommended to help diversify Kings Cross and dilute its quantity of bars and clubs in close proximity, with a review of the laws in “The Cross” to take place in 12 months.
The freeze on liquor licences should also remain until at least June 2020.
Among other recommendations were the appointment of a “night time co-ordinatior” who could help nightlife stakeholders collaborate on safety, as well as the creation of a working group including police and doctors.
It also recommended the use of ID scanners in Kings Cross be restricted to after 10pm on Friday and Saturday.
Sydney Lord Mayor Clover Moore said in a statement she welcomed the inquiry’s recommendations and the repeal of lockout laws would “breathe oxygen into Sydney’s nightlife”.