Beer Store should pay more to province, says...
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Nov 13, 2014  |  Vote 0    0

Beer Store should pay more to province, says privatization czar

Premier Kathleen Wynne’s government is threatening to take away the privately owned Beer Store monopoly if brewers balk at paying a “franchise fee” to the province


Premier Kathleen Wynne’s government is threatening to take away the privately owned Beer Store monopoly if brewers balk at paying a “franchise fee” to the province.

That’s according to Wynne’s privatization czar, former TD Bank chair Ed Clark, who tabled a report on public assets Thursday that recommends modernizing booze sales.

While Clark cautions against selling off the Liquor Control Board of Ontario, he said the province could “free up $2 billion to $3 billion” to fund transit by liquidating parts of Hydro One.

More controversially, he said The Beer Store, owned by AB InBev, MolsonCoors, and Sapporo, will have to cough up more money to Queen’s Park without raising prices for consumers — or else.

“Their position is that they can’t afford to absorb a tax,” Clark told reporters in a conference call after releasing his 77-page study, “Retain & Gain: Making Ontario’s Assets Work Better for Taxpayers and Consumers.”

“If we do decide to charge a franchise fee of some sort (and they say) they don’t have any room, they’re just right up against the wall here and they don’t have a dollar to give . . . we’re saying, ‘Well, then that means you’re really saying is that this franchise that you have is worthless. Would you then give it up?’ ” said Clark.

“And then they say they don’t want to, but they don’t want to pay for it. We don’t think that’s a reasonable position. If you really think this thing is valueless, then give it up and we’ll auction it off and see if people would pay something for it.”

Clark’s salvo, which went further than anything in his premier’s advisory council on government assets’ report, caught the breweries off guard.

“Beyond what’s in the report, we haven’t seen anything from the council on that issue at all. We haven’t received anything that speaks to (those) comments,” said Jeff Newton, president of Canada’s National Brewers, which runs the 448 Beer Stores across Ontario.

The panel report said the LCBO, the government’s 639-outlet liquor monopoly, should be allowed to sell 12-packs of beer instead of just six-packs. That would help craft brewers, though cases of 24 would still be exclusively sold at The Beer Store.

“We believe that the relationship between the provincial government and The Beer Store should be revised to ensure that Ontario taxpayers receive their fair share of the profits from The Beer Store,” the report said.

“Consumers should not see an increase in prices as a result of this change.”

But Newton argued The Beer Store and the breweries, which employ 9,600 people in the province, cannot absorb any levy because “at the end of the day those costs have to go somewhere.”

A brewing war with the parent companies of Labatt, Molson, and Sleeman was the most sensational revelation in Clark’s report, which was immediately endorsed by Finance Minister Charles Sousa, who tables the fall economic statement Monday.

“The government agrees with the council’s initial proposals and is asking the council to move to the second phase of its review,” Sousa said a statement, noting further details will come in budget next spring.

Clark also recommends the LCBO expand its retailing online and with “warehouse depot stores” and specialty boutiques that “emphasize craft beer or craft distillery products” and wines.

“For example, a store on the Danforth in Toronto could specialize in Greek wines and spirits while in Little Italy customers could find an exclusive selection of Italian wines and beers,” his report said.

Heather MacGregor, a spokeswoman for the LCBO, said it is awaiting “further direction from government on next steps.”

The panel also recommends the Liberals sell off parts of Hydro One, the provincial transmission company, including Hydro One Brampton and Hydro One Networks’ distribution arm.

That would bring in between $2 billion and $3 billion in one-time money and help Wynne fund her promised $29 billion for transit and transportation infrastructure over the next decade — $15 billion for the Greater Toronto and Hamilton Area and $14 billion for the rest of the province.

Toronto Star

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