Monday, July 18, 2005

Drunk With Power

Ontario Finance Minister Greg Sorbara has confirmed that the province will not put the LCBO up for sale.

The report from the Beverage Alcohol System Review panel called for the province to get out of the booze business and to allow grocers and other large retailers to sell alcohol.


While alcohol sales generate about $1.5 billion annually for the province, the panel said another $200 million could be generated annually through the issuance of liquor sales licences.

If I understand Sorbara's thinking: selling the LCBO opens the door to competition, competition leads to lower prices, lower prices leads to less tax revenue.

Unless the government wants to encourage people to drink more. Not that I need more encouragement.

Source: CBC


Warwick said...

As a die-hard capitalist it pains me to have to point out that you are mistaken - in this one case.

I have no idea how or why, but the LCBO is actually managed not badly. It doesn't lose money (as all other crown corps do) and because it's a domestic monopoly buying from a competitive global market, it has pricing power. The LCBO is the largest single-buyer retailer of booze in the world. It can negotiate prices that no one else can.

The LCBO has a greater selection than the vast majority of private retailers in all but the largest markets and due to its bulk buying power, can offer that selection at prices that are at or below anywhere else. You can compare any LCBO outlet with any liquor store in Alberta where they privatized the selling of booze years ago. The LCBO wins every time. It's astonishing because it shouldn't work.

I'm chalking it up to the exception that proves the rule since it just may be the only single example of a well-run government enterprise of any sort.

How it got that way is a mystery. They run it like they have competition. They've renovated all of their stores, extended hours, had promotions... It's almost like they realize they're there to make money. Gasp.

I try not to think about it much. It's too confusing to think about.

Warwick said...

I guess I'll have to make room for dissenting opinion on this file.

I haven't been to Alberta for many years and the last time I was there, the cupboard was near bare in every place I went (very little selection unless you want a few cases of CC.)

Lorne Gunter begs to differ:

I'll defer to his stats on this one and assume that capitalism has caught up in Alberta booze outlets.