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Archive for December 4th, 2012

Why privatising the LCBO is a Bad Idea

December 04, 2012 @ 13:02 By: gordon Category: Current affairs

CBC has a story about Tim Hudak calling for the privatisation of the LCBO. Included is this quote from a statement made by Hudak:

“The LCBO is a prime example of Queen’s Park operating a commercial enterprise — from top to bottom — that should be exposed to private sector competition, enabling more consumer choice.”

It has long been a fact that the LCBO is the single largest purchaser of wines and spirit in the world and that this is why Ontarians have access to a huge catalogue of products from any LCBO store in the system. I fail to see how privatising LCBO will “[enable] more consumer choice” when we already have an enormous number of products to choose from. Splintering the industry by introducing multiple players will result in all of them having less buying power and very likely an overall decrease in selection and probably an increase in price.

There is an argument to be made for looking at expanding the network of stores that are allowed to sell wine and beer. Currently, retailers in rural areas are able to obtain a franchise from the LCBO to allow them to sell some products normally only available through an LCBO store. A couple of concerns for expanding this would be an increase in accessibility of alcohol to underage people and also the potential increase in crimes against the stores. Other provinces allow wine and beer to be sold through corner stores, so there should be ample crime statistics to examine.

But the biggest problem with selling off the LCBO is the revenue stream for the province. The LCBO generates a huge amount of revenue that goes into the provincial coffers. If the LCBO is privatised, how is he going to make up for this loss in revenue. A liquor tax could be collected at the point of sale, but that’s not going to make up for the loss of revenue from the profit made by the LCBO between their cost and the retail price.