THE W.O.R.D.

The Issue: Privatization of the LCBO in Ontario

It was once accepted that alcohol was the only monopoly product in Canada. This was the case for most of the 20th century in North
America. Today, beer, wine, spirits and other alcohol-related products
are sold in state-run corporation stores, agency outlets and other
licensed establishments. In the province of Ontario, liquor retailing
policy has remained unchanged compared to other provinces. As most
other provinces have moved towards various degrees of privatization of
alcohol sales, there have arisen pressures for the government of
Ontario to sell off the Liqour Control Board of Ontario and for the
get out of the retailing business.

However, the LCBO has become the largest single purchaser of alcohol
in the world and generates nearly $3 billion in profits and taxes for
the provincial government. At issue is the fact that the provincial
government could eliminate budget shortfalls left behind by the last
government by selling off its stores as the province of Alberta did in
the 1990’s. Other advocates of privatization justify their positions
through the fact that the government ought not to profit off a market
that it owns; that the sector be opened up for competion. Also, some
take the moral position that alcohol is a drug, and the government
should not be encouraging and thus profiting from the sale of drugs.
Proponents of the status quo argue that the governemnt is the one body
that can control the product best through regulating its availability,
prices, and selection, not to mention that any short-term gains would
be negated by the loss of long-term revenue.

Questions:

1. What is the best role of the LCBO in alcohol retailing and
distribution in Ontario?

2. Should the LCBO open up alcohol retailing to competion from the
private sector?

Further reading

www.lcbo.com
www.opha.on.ca/advocacy/letters/lcbo.html

Campbell, Murray. “LCBO Could Use a Splash of Competition”. The Globe
and Mail (Toronto), February 9, 2006.
MacLellan, Stephanie. “No Need to Privatize LCBO, Outgoing Boss Says”.
Guelph Mercury, February 10, 2006.