Sydney wasn't vibrant before these alcohol laws, it was embarrassing - The Drum (Australian Broadcasting Corporation)
Inner city areas change all the time - weren't people complaining about Oxford Street dying long before the lock out laws? As the author writes in this very fair minded article, it's also the case that 24 hour liquor licences and sudden popularity with hoards of drunk youngsters crowds out other, more sedate, businesses (like restaurants).
Overly liberal licencing laws therefore benefit some type of businesses at the cost of others. Tightening those laws means there may be a transition to the other type of businesses in the area. Residents may well find their property values increasing; drug peddlers, prostitutes and strippers may have to find some other area to work from. Such is life when governments decide, with voter approval, that regulation needs tightening.