Many private liquor-store owners in B.C. are justifiably worried — their wholesale supplier is also their competitor, as well as the entity that sets the rules on how they run their business.
It’s unfair, and it’s indicative of the confusion and ambiguity that surround the provincial government’s role in the liquor trade.
On April 1, new rules came into effect that allow government liquor stores to operate on Sundays and holidays and for extended hours. Some private operators say the changes have cut into their sales.
Until 2002, the government had a near-monopoly on the retail sale of hard liquor, and a relatively small number of private stores sold cold beer and wine.
When his government was first elected, premier Gordon Campbell promised to get the province out of the liquor business and turn it over to private operators.
But Campbell’s enthusiasm faded, perhaps after someone showed him the books. The province’s liquor monopoly is enormously profitable, bringing in more revenues than the Insurance Corp. of B.C. and B.C. Hydro combined.
So the original plan was scrapped, and the B.C. Liberal government then launched, in fumbling fashion, a semblance of privatization. Those who wanted to open private liquor stores had to agree to buy all their stock from the government, at a price controlled by the government, with the selection available determined by the government. It was not a perfect retail opportunity, but still, the number of liquor stores doubled over the next decade.
Competition is part of commerce, but the rules severely restricted competition. One advantage the private stores had was that they could operate from 9 a.m. to 11 p.m., seven days a week.
Those who invested in private stores did so knowing the rules. But they stand on shifting ground when the government can change the rules, and that is what has happened.
The government makes a profit on its own liquor sales. In addition, it taxes the liquor sold by private retailers. That brings in a lot of revenue.
But the Parkland Institute cautions that revenues governments get from liquor sales are not a windfall.
“Indeed, the liquor industry is rarely a net earner for governments when the costs of managing alcohol consumption are included in calculations,” says a Parkland research paper. “In Canada, liquor prices are too low to allow governments to recoup all of the costs related to the public health and social consequences of alcohol consumption.”
Selling more liquor might seem like a way to help balance the budget, but that’s looking only at revenues, not costs. More liquor sold means more problems, according to Norman Giesbrecht, senior scientist emeritus with the Centre for Addiction and Mental Health in Toronto.
“International research … has shown repeatedly that if more alcohol is sold and appropriate checks are not in place, then more harm can be expected,” wrote Giesbrecht. “These harms include a range of health and social problems impacting not only the drinker, but others in society. They contribute to the already high costs of alcohol-related hospital care (chronic and emergency), criminal-justice responses and productivity losses.”
Alcohol is by far the most destructive drug available in the province, legally or illegally. The B.C. Centre for Addictions Research at the University of Victoria estimated that alcohol was responsible for 2,000 deaths and more than 20,000 hospital visits in B.C. in 2009.
It’s proper, then, that alcohol be strictly regulated, but there’s an inherent conflict of interest when the regulator is also the seller. Perhaps the government should leave the selling of liquor up to the retail sector, and focus on regulating the trade while taxing it appropriately to recover associated costs.
