Liquor Control Board of Ontario - Debate Over Privatization

Debate Over Privatization

There have been numerous discussions about whether the province should sell, or privatize, the LCBO. It has been argued that the main benefit would be the billions of dollars that would be the immediate windfall from any sale. However, this sale would only deliver a one-time profit, and the province would lose out on a source of steady yearly income. It has also been argued that the government could actually earn more money by dismantling the high-margin retail stores while keeping the lucrative wholesale business as Alberta's privatization of the liquor business suggests. The LCBO's 2006-07 net income was $1.3 billion Canadian dollars (excluding tax revenues generated by Brewers Retail and the independent wine stores), and a sale has been estimated to reap about six billion dollars. Former Premier Ernie Eves stated that when he investigated this possibility, he found that a 100 per cent sale through an income trust would generate 16 billion dollars.

In an attempt to find more revenue for the government within the current system, former Ontario Finance Minister Greg Sorbara ordered a review of the province's liquor distribution methods, under the supervision of John Lacey, a former LCBO board member and grocery executive. Sorbara had stated that any option, other than the complete privatization of the LCBO, would be open for discussion. Subsequent to the release of the report, known as the Beverage Alcohol System Review (BASR), Sorbara rejected the report's recommendations and argued for the continued public ownership of the LCBO. Rejection of the findings notwithstanding, the 2005 report defined the potential benefits of privatization alternatives as greater consumer, convenience and choice via a competitive retail environment, a reduction in government-held investment risk while simultaneously increasing its annual revenues.

An earlier 1994 report from York University concluded there to be little governmental or public support for privatization. There may be political motivations to keep alcohol sales public as well, as the LCBO is an excellent source of sinecures for the sitting government. Current LCBO Board Chair, Philip J. Olsson, a long-time Liberal supporter, was appointed by the Liberal government shortly after they took power. The previous Chair, Andy Brandt, was appointed by NDP Premier Bob Rae in 1991, even though Brandt had been a Conservative Member of Provincial Parliament for a number of years. In 2007, LCBO separated the Board Chair and President/CEO functions, making the Board Chair position part-time. Olsson receives a per-diem for his work as Board Chair, which he donates to the United Way.