Liberals will put the screws to the LCBO

"He's desperate for revenue," said Jim Flaherty, a former Tory cabinet minister who advocates LCBO privatization. "This is privatization by stealth," added Marilyn Churley, a former New Democrat cabinet minister responsible for the board.

The Globe and Mail
January 12, 2005

Liberals will put the screws to the LCBO
Murray Campbell

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Ontario could be on the verge of a revolution in the way beer, wine and spirits are sold. Or not. Let's not get ahead of ourselves here.

Finance Minister Greg Sorbara was spectacularly opaque yesterday when he announced that an "expert panel" (be still, my heart) had been appointed to review how alcoholic beverages are distributed and sold in Ontario. He laid down a few markers.

First, the giant monopoly Liquor Control Board of Ontario would not be sold. And second, he wanted his panel to ensure that alcohol is consumed responsibly even as consumers get greater convenience and variety. (The two aims may be self-contradictory, but never mind.)

Above all, he said he wanted his experts to figure out how to "maximize value to taxpayers." It's suitably vague, but what it really means is that the government wants to put the screws to the LCBO. The province has been edging toward this for a decade, since Mike Harris's Progressive Conservatives came to office with a determination to sell the LCBO to the private sector. They backed away from this goal, but the idea has never really gone away.

A year ago, Premier Dalton McGuinty refused to rule out any LCBO sale, despite being given umpteen opportunities to do so. At the same time, the government was asking focus groups what they thought of selling the board's 600 stores as franchises. Last summer, Mr. Sorbara denied the government was evaluating proposals to convert the LCBO into an income trust so that investors could tap into its stable $3-billion annual revenue. A few months later, however, he was saying he was concerned that the LCBO wasn't profitable enough.

If it's been difficult up to now to follow the bouncing ball, Mr. Sorbara's news conference yesterday only added to the eye strain. Beyond ruling out privatization, he seemed to leave every option open — beer and wine in corner stores, franchising and even the income trust that he earlier rejected. "I don't want to speculate today on what the panel might or might not consider."

This vagueness aside, the government is right that the time has come to look at the patchwork of policies governing the sale of alcohol that date from the end of Prohibition in the 1920s. The LCBO, the 75-year-old government-owned monopoly, will undoubtedly be the focus of the review, but it's appropriate that the more than 435 stores operated by Brewers Retail Inc. and the 380 or so retail Ontario wine stores be included. God knows that almost every adult in the province will have an opinion about the location of stores and what they sell.

The Wine Council of Ontario welcomed the panel's appointment, saying it is pleased that Mr. Sorbara charged his appointees with promoting Ontario's products. Brewers of Canada, which last year suggested merging its beer stores with LCBO outlets, was also upbeat even though it isn't represented on the panel. "As good as the system is, are there opportunities here … for these three [organizations] to be configured in a way that might be even more efficient and lower cost?" said president Jeff Newton.

There is a widespread feeling that Mr. Sorbara already knows what he wants despite his protests that everything is up for debate. "He's desperate for revenue," said Jim Flaherty, a former Tory cabinet minister who advocates LCBO privatization. "This is privatization by stealth," added Marilyn Churley, a former New Democrat cabinet minister responsible for the board.

Whatever the panel recommends in its spring report, it's a lock that Mr. Sorbara will choose the option that offers the greatest return from the LCBO. Senior government officials believe that its profits are too low and that its annual dividend to the province (last year, $1.04-billion) should be much higher.

Every year, just before Christmas, the LCBO holds a reception at Queen's Park to shower fine wines and spirits on legislators and to boast about the size of its contribution to the budget. This year, partygoers were handed a loot bag stuffed with food and drink magazines and videotapes produced by the LCBO. The tutting and clucking echoed in the marble corridors — to many government officials it seemed a long way from the simple business of selling alcohol.

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