It is legal to brew beer or wine at home, but not to distill spirits without a license. It is impossible for hobbyist to obtain a license, as they are only issued for huge stills (minimum size 20000 litres).
It is illogical to allow people to brew alcohol, but to forbid them from distilling (which is a process of removing undesireable components).
The only real reason for the restriction is because of revenue, but the example of home beer brewing shows that the reduction in revenue is minimal.
The legalization of home distilling in New Zealand has led to a flourishing community of home distillers – and to have people take more of an interest in what they drink, can’t be a bad thing.