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cityscape

Public Works: Selling the LCBO

Lots of other places have abandoned government liquor monopolies without descending into drunken chaos. Should we make the leap?

Public Works looks at public space, urban design, and city-building innovations from around the world, and considers what Toronto might learn from them.

Photo by DdotG from the Torontoist Flickr Pool.

This week, Tory leader Tim Hudak promised that if he were premier, liquor sales in Ontario would be privatized. The idea has been floating around for decades, of course, and is often trotted out when a politician wants to assert their non-socialism or is just suffering from a lack of attention.

The government booze monopoly has been abandoned in many North American jurisdictions—to say nothing of Europe, where baby formula and table wine are pretty much equally available. Should we do it here?

Change can be good. Ontarians of a certain age may remember a time when LCBO stores were cheerless Soviet-style warehouses where customers reviewed short lists of options before completing application forms for their purchases. The documents were reviewed by grim-faced apparatchiks with facial expressions that conveyed appropriate amounts of disapproval for customers’ moral turpitude. These clerks would disappear into the back, eventually returning with the booze.

We’ve come a long way since then, not just in terms of product variety and access, but also in terms of customer experience. Modern LCBO outlets have bright lights, Vivaldi on the PA system, and cheery Aussies pitching kangaroo-flavoured Chardonnay samples. Would privatization serve us better?

Well, let’s consider what a liquor distribution system needs to accomplish.

PR flacking about “social responsibility” notwithstanding, the main job of the LCBO is to raise money for the government. If the industry were opened up to competition, prices could drop, sales could increase, and more tax dollars could flow to government coffers. However, a 2011 report from the Parkland Institute says that the per-capita government revenues from alcohol sales in Alberta have dropped steadily since liquor sales were privatized in 1993, and that those revenues were lower than in both B.C. and Saskatchewan (where some and all liquor stores, respectively, are government operated).

We also want to provide buyers with decent price, convenience, and selection. LCBO stores today are able to offer a broad array of product, from fancy gift liquors, to imported wines and beers, to the full panoply of “Hold-Ashley’s-hair-back-while-she-pukes” coolers.

This is possible in part because the LCBO has the resources to deal with a variety of vendors, both large and small. But it’s also because, unlike private enterprise, the organization isn’t driven entirely by profit. Where a private operator might stock shelves with cheap, high-margin beers and sweet, disgusting wine-based product, the LCBO can afford to take risks on unusual items. (If you doubt this characterization of private alcohol sales, visit the liquor section at Walmart next time you’re in Buffalo.)

Price-wise, the conventional wisdom is that we pay too much for our alcohol here in Ontario, and that we could do better if we had less monopoly. But in 2004, when the B.C. government first allowed private liquor sales, the predicted price drop didn’t materialize. A study [PDF] from the Consumers’ Association of Canada only two years later found that despite the rapid proliferation of private liquor retailers, prices were higher than in the remaining government-run stores (although it should be noted that all stores still have to buy their product from the government, with large markups). The Parkland study referenced above arrived at similar conclusions.

Finally, the goal of a government booze monopoly is to better protect us from ourselves—to keep us away from the silly sauce when we’re underage, or when we’ve already reached the government-approved level of boozy dementia. While private retailers may comply with the law for fear of punishment, a greater number of stores would increase the probability of there being a few opportunistic owners willing to take a chance and sell illegally.

This isn’t just an assumption. A study this year from the Canadian Centre for Policy Alternatives found that public liquor stores in B.C. are twice as likely to turn away kids and drunks as private stores. So this category is definitely a win for Big Bartender.

In any case, telling us what to do is what government excels at. The LCBO, in particular, does it well (apart from their controversial policy of selling booze to underage teens in burkas).

And everything else notwithstanding, Ontario has never demonstrated all that much enthusiasm for dismantling the LCBO. Even Mike Harris couldn’t get six-packs into his corner store.

So why change? We have a system that does more or less what it’s supposed to do, and to which the population is basically indifferent. Not a ringing endorsement, but that’s how we roll here in Ontario.

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