Flaherty vows to get out of booze business

Finance Minister Jim Flaherty says he would sell off the LCBO, take away the brewers' monopoly and doesn't rule out selling booze in corner stores if he becomes premier.

The Toronto Star
February 23, 2002

Flaherty vows to get out of booze business
Candidate would also sell TVO, Ontario Place
Richard Brennan and Steven Theobald


Finance Minister Jim Flaherty says he would sell off the LCBO, take away the brewers' monopoly and doesn't rule out selling booze in corner stores if he becomes premier.

Flaherty, one of five candidates to replace Premier Mike Harris, yesterday released his package of privatization goals, which include selling off TV Ontario and Ontario Place.

"There is no compelling social or economic reason or fiscal reason for government to be in the retail business of selling alcohol," Flaherty told reporters after placing a "for sale" sign in front of an Liquor Control Board of Ontario outlet on Danforth Ave.

"There are lots of … private merchants … who are prepared to pay handsomely to be in the business," he said, refusing to guess whether prices would be higher or lower.

When asked about corner stores, he said: "I wouldn't rule that out … but the challenge … for a mom-and-pop operation would be the training (and) strict regulation that they would have to follow, all of which would mean some expense."

As part of the Common Sense Revolution platform, the Conservatives promised before they took power in 1995 to sell off the LCBO and surplus government land to the private sector and use the money to pay down the province's debt.

Flaherty said yesterday he would introduce a new licensing system, run by the Alcohol and Gaming Commission, for private operators wanting to sell beer, wine and spirits. He said it would generate more than $1.2 billion a year, far higher, he noted, than the LCBO's annual profit of $900 million.

The LCBO, which has 600 outlets, turns over about $1.2 billion when provincial sales tax is included. The LCBO expects to transfer $905 million in profit for 2001-02.

Under Flaherty's plan, the Brewers of Ontario, created in 1927 to sell beer for the various brewers, would be able to apply for licences to sell all types of alcohol, but would no longer have a lock on beer sales. There are 433 Beer Store outlets across the province.

"They will not be entitled to have more stores than they have presently," he said.

The finance minister said the province would continue to regulate the alcohol business and promote responsible drinking "and I pledge to strengthen current regulations to help curb alcohol abuse."

He said any retailers found to be selling alcohol to minors would lose their licence.

Flaherty said within a year he would also sell TVO, Ontario Place, the Elgin and Winter Garden Theatre, Big Thunder Ski Hill in Thunder Bay, and any other surplus government lands, plus the province's share in Teranet, an e-commerce provider. Big Thunder had been for sale but that was put on hold because of a native land claim.

"We need to focus on our priorities in Ontario and we need to concentrate government on those priorities and I will carry on the tradition of the (Common Sense Revolution)," he told reporters.

"It means privatizing areas of government where government has no business. A good rule of thumb is that if it is a business that's listed in the yellow pages government should probably not be doing it."

‘There is no compelling social or economic reason or fiscal reason for government to be in the retail business of selling alcohol.’

Jim Flaherty

Tory Leadership candidate Labour Minister Chris Stockwell, who is also running for the provincial Tory leadership, said selling the LCBO would be a bad idea.

"I don't believe you're going to generate the amounts of money he's claiming," he said.

Also in the race to replace Harris are Health Minister Tony Clement, who would consider an LCBO sell-off, former finance minister Ernie Eves and Environment Minister Elizabeth Witmer. Tories vote on a new party leader March 23.

Ellen Cole, TVO's director of communications, said the provincially owned educational station went through a privatization review in 1997-98, and the Ontario government decided to keep it.

Officials with Ontario Place refused comment.

John Newton, executive director of Brewers of Ontario, said the current system has been good for consumers, the breweries, and the provincial government, pointing out that annual beer sales contribute about $850 million a year in sales tax to provincial coffers.

Newton argued increased distribution costs would eventually be passed on to consumers at corner stores.

Nonsense, responded Peter Flach, executive director of the Ontario Convenience Store Association, which has lobbied long and hard to sell beer.

"I am 100 per cent certain it will be less costly for the consumer," Flach said, whose 2,500 members include Alimentation Couche-Tard Inc., owner of the Becker's and Mac's chains. "If you have an open market the price will go down."

John Coones, president of the 5,500-strong Ontario Liquor Boards Employees' Union, said Flaherty's plan to sell off the LCBO "doesn't make any real sense" given that the agency is looking at its sixth straight year of record sales.

Coones scoffed at Flaherty's insistence that workers who stock shelves make $31 an hour, saying the maximum hourly rate is $19.57.

Smaller brewers had grave concerns about Flaherty's proposal to take away the beer monopoly.

"For a micro-brewer like us it would be suicide," said Ken Woods, co-founder of Oakville-based Black Oak Brewing Co. Ltd. "It would be a logistical nightmare."

Convenience stores tend to carry only the mass-market brands and even if they did sell a micro beer, they might not move enough volume to keep the product fresh, Woods said.

With files from Canadian Press

Brought to you by WikidFranchise.org

Risks: Monopoly or near-monopolies creates sub-optimal capital allocations, Exempt from Ontario franchise law obligations, Robber baron, Canada, 20020223 Flaherty vows

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License