Should Ontario’s LCBO Outlet’s Be Privatized? – It’s Like Déjà vu All Over Again

A Brief Foreword by Doug Draper

 Tim Hudak, a Niagara area MPP and leader of the Progressive Conservatives in Ontario, is recycling the idea of privatizing the province’s liquor retail stores.

Are the province's profitable LCBO outlets on the chopping block again? Photo by Doug Draper

Are the province’s profitable LCBO outlets on the chopping block again? Photo by Doug Draper

A media release circulated by Hudak’s office this December 4 reads as follows; “The province should consider all options for increase choice and competition, Hudak said, ranging from the sale, partial sale or greater private franchising of non-core assets like the LCBO.”

These words may tickle the hearts of that part of Hudak’s conservative  base that see privatization as a tool for shrinking government down to its bare-bone core. But what sense does it make to sell off an ‘asset’ like the LCOB  – as non-core as it may be – that generates billions of dollars in revenue that can be used to cover the costs of health care, education and other core services at least some of us may still want government to run? Why would anyone – even someone as dumb as too many of those we have serving in elected office these days – ditch a cash cow like this unless they are desperate for fast money?

 Sort of like some guy who plays saxophone for a living leaving his horn at a pawn shop for a few quick bucks, it sure in hell doesn’t make any financial sense in the long run!

Now there are certainly some people out there who will argue that they don’t care if it makes financial sense or not. They want their booze sold in private stores, just as it is across the border in New York State, because it is cheaper and easier to get a hand on. They got liquor stores in the Buffalo area decorated with signs that say ‘Never Closed” for God’s sake!

 Between the idea of easier access and more competitive pricing for booze, and the whole appeal for some of privatizing services with an eye to getting government out of our lives, Hudak’s December 4 call for privatizing the LCBO may have a good deal of appeal, and it is hardly the first time it has been proposed.

The former Liberal government of David Peterson promised to legalize the sale of at least beer and wine in private stores in the late 1980s before backing off on the idea. Later, in the mid to late 1990s, the former Conservative government of Mike Harris, of which Hudak was a part, toyed with the idea. And just two years ago this fall, the McGuinty Liberals floated the idea of selling LCBO outlets to private interests until it was reminded that this particular non-core enterprise is good for a clean billion-and-a-half dollars of revenue pouring into the government’s coffers each year.

Niagara At Large posted a commentary by yours truly two years ago this December, urging a stop to the idea by the Liberal government then to sell off this source of public revenue to private interests who would most certainly pocket the profits for things that have nothing to do with covering the costs of schools and health care.

 NAL is now recycling that piece, first posted in December of 2009.,  with a footnote that little has changed but a few of the names.

Ontario Plan To Sell Off Publicly Owned Properties Must Be Stopped

Posted on December 17, 2009 | 3 Comments | Edit

By Doug Draper

Thing must be getting awfully desperate in Ontario when the provincial government has to consider selling off some of its richest public assets to grab some quick cash.

Yes, we know the province’s Liberal government is facing a record $24.7-billion deficit thanks to a combination of the Great Recession, a massive exodus of industry and its own fiscal mismanagement. But does that mean the government should hold a fire sale that could lead to assets like Ontario One, power generating facilities like Sir Adam Beck in Niagara Falls, the LCBO and others that rake in billions of dollars in revenue annually for the province, falling into private hands?

We’ve seen this movie in Ontario before with the Conservative government of Mike Harris pushing to privatize a number of public-owned assets, including a number of the province’s conservation parks. Fortunately, the Harris government’s plans to sell our parks and our power utilities were scuttled in a tidal wave of protest from Ontario citizens and others, including the now-governing Liberals. But it did manage to get away with selling Hwy. 407 in the greater Toronto area to a private consortium and motorists have been paying for it ever since with ridiculously high toll rates for this 67-mile-road that make the tolls for driving the entire 300-mile plus stretch of New York State Thruway between Buffalo and Albany seem like a Christmas gift.
As a representative for some of the employees working for the public corporations the McGuinty government is considering selling off now said to reporters in a recent interview – this is akin to someone throwing their furniture in their fireplace to keep their house warm.
It is a desperate, shortsighted way of dealing with a serious deficit problem in the province – one that Ontarians may regret for generations to come – and it has got to be stopped.
News that the McGuinty government is considering privatizing some of the province’s publicly owned Crown corporations appeared on the front page of the Wednesday, Dec. 16 edition of The Globe and Mail. The newspaper reported that the government has quietly hired two banks, CIBC World Markets Inc. and Goldman Sachs Group In., to develop a plan for such a sell-off.
Among the Crown corporations named in the Globe story were the Liquor Control Board of Ontario (known better to many of us as the LCBO) and the Ontario Lottery and Gaming Corp., responsible for selling all those lottery tickets in convenience stores.
Now some of you out there may argue that the sale of assets like the LCBO and lottery corporation makes sense and may be better for consumers, and if you feel that way don’t hesitate to state your views in the comment box below.
Take the case of the LCBO. Certainly there are some out there among us who believe we might get better service, a greater variety of wines and spirits on the shelves, and more discounts if these stores were in private hands. If there was any chance we’d end up with the same variety of stores that they have in states like New York and Massachusetts, where there is a multiplicity of owners who are competing with each other, that might be so.
But it is just as likely that the province could sell these stores to a single corporation that would then have a monopoly on the retail sale of all liquor and wine. If that’s the case there would be no competition and no incentive to lower prices or maintain the quality of service offered by the LCBO today.

The Globe article quoted bank sources saying there are “plenty of buyers” interested in possibly purchasing these Crown corporations, and why wouldn’t they be. The LCBO racked in about $1.4 billion in profits last year. These were profits that went to public coffers to pay for services in Ontario. There is nothing to stop a private owner from taking these profits and investing them in another country if they wish.

Furthermore, do we really want to turn our major energy facilities over to private hands? Do we really want to take the chance of losing public control of corporations that produce our energy? Can we trust private corporations to do a better job or give the consumer a better deal? Look at the recent performance records of private corporations like General Motors and Nortel.

And where will the fire sale end? What if the province gets desperate enough to put some of our provincial parks on the auction block? I’ll bet you the Short Hills Provincial Park, sprawling across the borders of Pelham, Thorold and St. Catharines, would command a pretty good price on the real-estate market. But how can you weigh that against the value of this great park as a natural area for the children of our region to enjoy for generations to come?

According to The Globe report, the provincial government wants to move forward with a possible sale of some of the province’s assets fairly quickly. One can only speculate as to the reason. Could it have something to do with a hope that the quick dollars it will take in will make the province’s books look a little better before the next election, now less than two years down the road?

The implications of what the province is considering doing here could be massive and even tragic for Ontario residents in the long run.

Surely there are other ways the province can control costs and generate revenue than selling away the store.

Contact your provincial member of parliament about this issue and let him or her know what you think before it is too late.

(Niagara At Large invites you to share your views on this post below. Please Note that NAL only posts comments by individuals who also share their first and last name. Anonymity doesn’t fly here.)

7 responses to “Should Ontario’s LCBO Outlet’s Be Privatized? – It’s Like Déjà vu All Over Again

  1. Just a comment. According to a letter printed in The Globe and Mail this morning, since Alberta privatized their liquir outlets, prices have gone up across the board. The letter suggests this is what happens to all privatized
    institutions or agencies. I dunno.

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  2. Selling off the LCBO and the Ontario Lottery and Gaming Corporation makes absolutely no sense at all. They provide billions of dollars each year into our coffers. This much needed money is being used to fund essential services such as health care, education, infrastructure and social services. The Star had a comparison of the prices of alcohol in provinces where it is sold in grocery stores and corner stores. Guess what – are prices are lower. B.C..Alberta and Nova Scotia have the highest crime rates in the country and they allow the sale of alcohol in private outlets. The argument that prices will be lower due to more competition does not hold water.

    Tim Hudak wants to privatize as much as possible and make government smaller . Privatizing the license bureaus did not make it more efficient- there are fewer outlets and you need to travel farther. We will also see a large number of people loose their jobs. Experience has shown that the vast majority will not find work in the same field. Why do we want to increase our unemployment rates? Private corporations need to make a profit and prices are higher. We only need to look no further than the new hospital in St. Catharines. It is a P3 and it cost more to build – money which shoulde go into health services and care is going to the money managers and the management company. Further more we still don’t know if when this hospital opens in 2013 if it will have the 375 beds that were promised.

    The Liberals have closed some parks and it will be interesting to see when these will be put up for sale. The Bruce nuclear power plants operating costs keep increasing. Who is benefitting ? Certainly not the consumer!

    A review of the provincial budget a few weeks ago, showed that the deficit is not as large as first anticipated. We don’t need a firesale of our assets. We need better management and oversight. Add up what we lost through Ornge, ehealth and the cancellation of power plants – the total is at least 15% of our deficit. Our deficit created in part by the economic downturn, the lowering of corporate taxes and not plugging up the loopholes in the Employee Health Tax. Our deficit can be reduced dramatically by increasing corporate taxes . Where are the jobs that were to be created because of the tax savings?
    All I see with Tim Hudak’s proposals is more privatization, fewer services, greater out of pocket expenditures and a government so cash strapped that it could like some state governments be at the point of declaring bankruptcy.
    The neo-conservative agenda did not work there and it certainly will not work here.

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  3. Hudak’s threatening to sell off MONEY MAKING assets OWNED by the taxpayers of Ontario is NO surprise for Hudak is catering to his financial supporters the investment bankers and Corporations who are frothing at the mouth in anticipation of a conservative election victory.
    The Bottom Line on a PROFIT AND LOST is the only bible Corporations bow to and PROFIT is their greatest GOD
    Most care not about how that profit comes about just as long as the ink is BLACK.

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  4. To Tim Hudak:
    NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO NO
    Please Tim, do Ontario a favour … crawl back under your rock — and stay there! We don’t need your kind of lizardry around here.

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  5. YES YES YES YES YES
    Tim do Ontario a favour and drop that rock on the noggin of that lizardly Will MacKenzie.

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  6. As a taxpayer I feel we should definitely Not sell the LCBO I’m sick of hearing about it. I’m a private sector worker and I see waste being made in public sector Jobs Such as teachers o.p.p and hydro. They receive more benefits and perks than anyone else! At least the LCBO and the Ontario Lottery and Gaming Corporation is profitable! Please leave them alone! L.C

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  7. I think a lot of people cannot see past their noses when it comes to common sense. I for one am against selling off the LCBO. I just think that they should stay open as usual but also let grocery and convenience stores sell it also. Then you would see so much more revenue for the government so we can reduce this massive debt.

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