I was quite surprised to read in The Globe and Mail that the Liberal government has hired two banks to look into selling the LCBO and other Crown assets to cover this year’s deficit.
After all, wasn’t this brought up before by Mike Harris et al. (and Ernie Eves before him?) and dismissed when the government realized that selling valuable assets to raise money may help cover their deficit now won’t do much for balancing the budget the next year?
But leaving aside whether it’s smart for the Liberals to divest themselves of one of their best and brightest cash cows, which is best for the citizens of Ontario; sale or no sale?
Judging from the comments on the G&M article, a lot of people are confused as to whether this would be a good thing and while I’m not an unabashed fan of the LCBO, I’m also not about to jump on the privatization bandwagon unless I’m sure that it would really benefit us.
So let’s look at the three of the biggest points being raised and see whether they have any merit or not.
Booze would be cheaper.
Really? That would be nice but most consumers don’t realize is that there In the US, each state has its own laws concerning the distribution and sale of alcohol. Some places are cheaper than others but I still have fond memories of brown-bagging tall-boys in NYC; I went to quite a few variety stores and prices ranged from $1.25 to$2.50 for a Coors Light which is not that radically different but you obviously pay more for the “convenience”. A case of mass-market, domestic beer that costs $36 in Ontario typically costs $22 in Quebec and about $18 in New Jersey.
The reason it’s generally cheaper down in the States has everything to do with taxes. Here in Canada, we pay a 26.5% tax on alcohol which includes a 5.75% liquor mark-up fee. In the US, the percentage of taxes applied to alcohol varies from state to state but they’re nowhere near as high.
I’d be the last person to suggest we get rid of the taxes that pay for our health care system (amongst other things) but I do think the mark-up is ridiculous. Still even if the LCBO were sold and the mark-up was removed, we wouldn’t be looking at the same price levels they have in the States; we would probably be a lot closer to Alberta or Quebec. (Strangely enough, spirits are cheaper in Alberta but wine and beer aren’t. Wine and beer are cheaper in Quebec thanks to provincial subsidies that favor local products.)
And there’s no guarantee the mark-up would disappear. If anything, it’s unlikely it would go anywhere since pricing is regulated by the government to ensure socially-responsible consumption of alcohol which, along with store hours, is one of the primary methods they employ to prevent us from degenerating into a bunch of booze-soaked rummies (so we’re told).
Worse yet, if the entire company was sold and allowed to continue as a monopoly except in private hands, we’d have yet another Beer Store on our hands and you only have to look at Hydro One and the telecom companies to see where that gets the consumer.
Looking at the graph above (snatched from the LCBO website) it’s clear that the LCBO controls too much of market to allow it operate as a second private monopoly, answerable to no one but its stockholders.
The selection would be greater.
Yes and no. While the opportunity for specialists to open shops catering to niche markets is greater, there’d be just as many people carrying the same mass-market swill we see everywhere. With the exception of the bigger stores, most LCBOs only stock what they know consumers in their area will be likely to buy. Most private operations wouldn’t be any different.
One big concern is that while the bigger cities in Ontario would probably have no worse selection than they do now, many smaller towns in outlying areas would see their stores close with no guarantee of any replacement.
The sale of alcohol needs to be controlled.
Deciding who buys booze and when they can buy it is an age-old concern. Some people say there’s no harm in having convenience stores sell beer and wine while others argue that public drunkenness and under-age drinking will become bigger problems.
I’ve always argued that kids should be exposed to alcohol sooner rather than later (presumably limiting all of that surreptitious, binge drinking) but as that’s generally an unpopular opinion to have, I’d also like to point out that those same stores seem to do a pretty good job of preventing kids from smoking too.
Fact is, people will do what they want to do and the best results have always come from education and integration, not prohibition. The laws we already have in place will take care of the egregious offenders; why persecute anyone else?
Despite my beefs with the LCBO, I’ve come to realize that the provincial government is responsible for nearly all of ‘em… the insane mark-up, lack of inter-provincial distribution (where the hell are my Quebec beers and my BC wines?) and inconvenient store hours.
Selling the LCBO doesn’t change any of that.
The powers that be will still regulate the fuck out of whomever’s selling us our booze and unless they decide private operators to cater to niche consumers, we’ll be looking at another monopoly. We don’t need another Beer Store.
What we do need is a reexamination of the liquor laws and regulations that have their background in Ontario’s Scottish-Protestant roots and adjusting them to fit a society that, over the past decade, has become a lot more conscious of when and how they drink, what they want to buy and where they buy it from.
(And a little store downtown selling me limited-release tequila, absinthe and bitters would be nice too.)