COMMENTARY: Good riddance to government-run liquor retail
Here in Alberta where I reside, there is a not insignificant segment of the adult population that has never known the old ALCB (Alberta Liquor Control Board) and that would likely offer little more than a blank stare if asked about it.
The ALCB was created in the aftermath of prohibition’s repeal in Alberta and the agency enjoyed tight control over liquor retail for decades. Government-run liquor stores have been extinct for a quarter of a century now, though, and you’d be hard-pressed to find an Albertan who longs for a return to a state-run monopoly.
That perspective adds a rather surreal element to any Ontario visit. Setting foot in an LCBO store is what I imagine it would be like if Alberta had a museum specifically dedicated to the ALCB. It’s therefore encouraging to see that it’s not just us Alberta snobs who view Ontario’s liquor retail landscape as horribly antiquated.
The Ontario PC party had promised during the recent election campaign to overhaul the province’s liquor retail system, and Thursday’s throne speech makes it clear that they intend to move very quickly on fulfilling that promise. The sale of beer and wine will be expanded to convenience stores, grocery stores and big-box stores, although it appears as though the LCBO and The Beer store, which currently enjoy a quasi-monopoly, will remain.
There has been much handwringing that has preceded this decision, and it’s very difficult to see why. The sky has not fallen in Alberta, where liquor retail was long ago privatized, or in the other provinces where there have been varying degrees of privatization — including Quebec, where beer and wine have long been sold in convenience stores.
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If it’s social harm that we are to fear, then it should be noted that the province that has long had Canada’s highest impaired driving rate is the province that long clung to its government monopoly: Saskatchewan. Such an argument also overlooks the fact that we trust these very same private retailers to oversee the sale of tobacco and lottery tickets. What’s needed are rules around the sale of the product and enforcement of those rules.
If it’s higher prices we are to fear, then that argument is hard to reconcile with an argument about social harm, but it should also be noted that Quebec’s prices are lower than Ontario’s. Alcohol taxes and markups also have a significant bearing on the price of liquor products.
A 2014 study by the C.D. Howe Institute made the case that Ontario could indeed lower prices through more competition, while at the same time bringing in more revenue. Researchers found that provinces with more competition, such as B.C. and Alberta, brought in about seven per cent more per capita than provinces with state-run monopolies.
As the report concludes, Ontario’s status quo “imposes excessive costs on consumers, restricts their menu of choices, and limits the accessibility of stores retailing alcohol. In addition, it imposes distortions on small domestic breweries and wineries and puts them at a competitive disadvantage relative to a few large Canadian and foreign producers.”
There is really no case to be made for the existence of any such monopoly or quasi-monopoly, and this demonstrates the many ways in which such a scheme distorts the market and harms consumers. The only controversy around Ontario’s new policy directive should be that it took this long to finally bring about this change.
A case could be made for such changes here in Alberta, too, although it would represent a considerable amount of upheaval for existing private retailers. Alberta opted for creating the narrow lane where private retailers could sell liquor, but only liquor. It led to the odd spectacle of supermarkets being allowed to sell alcohol, but only in separate buildings. However, given the amount of choice and convenience that exists in Alberta, it’s not the kind of change that many are clamouring for.
Where we’ve seen change in Canada, though, it’s been in the direction of liberalization and privatization. Support for the anachronism that is the state liquor retail monopoly continues to dwindle. Ontario’s move represents a huge step in the right direction.
Cheers to common sense.
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