A blue-ribbon panel on government assets is urging the expansion and modernization of the LCBO’s retail operations with big-box superstores, niche boutiques, and allowing the sale of 12-packs of beer.
TD Bank chair Ed Clark, Premier Kathleen Wynne’s privatization czar, also recommends selling off small utilities, including Hydro One Brampton, as part of a push to bring in billions to the cash-strapped treasury.
“You should not rush to sell assets — rushed sales are not in the public interest,” Clark told a luncheon speech Friday at the Metro Toronto Convention Centre.
His panel, which also includes former Progressive Conservative treasurer Janet Ecker and former NDP cabinet minister Frances Lankin, said there are “doable” ways to better monetize government-owned operations — especially the Liquor Control Board of Ontario (LCBO).
“If we put our recommendations, we could free up $2-3 billion, which can be invested in transit and transportation infrastructure without increasing the overall debt or deficit,” the banking titan said, noting that’s “a fiscally prudent step to solving our infrastructure issues” for a government with a $12.5 billion deficit.
Wynne is expected to give the advisory group the green light to proceed with its changes, which will be formalized through regulatory changes in Finance Minister Charles Sousa’s budget next spring.
Clark said the LCBO, the government’s 639-store monopoly that brings in $1.74 billion annually to Queen’s Park on sales of almost $5 billion, could be far more profitable.
“We were troubled that the LCBO doesn’t use its buying power to lower costs — despite being one of the largest buyers of wine and liquor in the world,” he said.
“It is critical to improve customer choice and convenience. We are not proposing changes to ‘push’ more drinking. We want changes to make changes to make purchasing alcohol more modern.”
To that end, LCBO should be allowed to sell 12-packs of beer instead of just six-packs — though cases of 24 would remain the purview of The Beer Store — and consider specialty outlets like “a Scotch boutique” or specific wines.
“The LCBO needs to adjust to the changes that are occurring everywhere in retailing as a result of the digital revolution. It needs to respond to a desire by the public to taste new, more boutique brands,” he said, conceding the booze giant is already starting to make some changes.
Clark also advises closing loopholes that see outlets such as Wine Rack, which are privately owned by domestic wine producers, taxed at a lower rate.
“In effect, a bottle of wine sold through one of the wine stores yields less to the government than a bottle of wine sold through the LCBO.”
Ontarians could also see more wine kiosks in their grocery stores run either by the LCBO or run by smaller Canadian wineries who don’t own the existing Wine Racks, Clark told the Star editorial board.
The banker takes aim at The Beer Store, a government-sanctioned private monopoly owned by foreign-owned firms, AB InBev, MolsonCoors, and Sapporo.
“Ontario taxpayers deserve their fair cut of the profits generated from beer producers,” said Clark, adding the government will ensure “the brewers won’t just pass on the additional cost immediately to the consumer.”
As well, the province should make sure “all breweries get equal treatment” on the shelves.
“Finding a craft beer at many Beer Stores can be like the game of Where’s Waldo? — hard to spot,” he said.
On Ontario’s energy assets, Clark said while Hydro One, the provincial transmission company, must remain in public hands, smaller distribution utilities should be sold.
He recommends selling off Hydro One Brampton and the distribution business in Hydro One Networks.
“We only need the courage to move forward in a pragmatic way.”
Speaking before Clark made his speech, NDP Leader Andrea Horwath said she will propose a motion requiring the majority Liberals hold a referendum before ”any sale” of Hydro One.
“Our public institutions are not theirs to sell off...they belong to every Ontarian,” she said.
- With Files From Rob Ferguson