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BCGEU Deal Curbs Privatization Progress

A tentative deal between the BC Government and the BCGEU will likely put an end to any progress on the privatization of BC\’s liquor stores. The deal is for 2 years, expiring March 31, 2012. The agreement commits the government to keeping at least 185 of its existing 197 LDB stores open and for it to continue running its distribution system. A reduction of the 185 number is only possible if existing stores are consolidated into \”signature stores\” on a 2 for 1 basis.

The nature of the agreement means that it will be difficult for the government to reduce the cost of running the LDB (currently about $300 million per year). Taxpayers will now continue to be burdened with the costs and risks of running a retail liquor operation, thus ensuring that retail prices remain excessively high and selection is limited. The government will not be able to raise badly needed cash by selling off existing stores (as was done when Alberta privatized its system). When government does not have sufficient funds to properly fund health care and education, this is perplexing … why would we continue to spend hundreds of millions of dollars annually to employ government workers as liquor store cashiers when we can\’t afford a sufficient number of teachers or nurses?

The winners in this are the BCGEU, some existing private retail stores who are shielded from competition by the current system, and the large commercial wineries that control the low end of the market (the \”Cellared in Canada\” product). Consumers and taxpayers will lose out as the government continues to foster a monopoly system which provides poor selection and which ensures some of the highest retail wine prices in the world. Smaller BC wineries will also lose out as they will continue to be denied access to a fair and accessible retail distribution system.

Regrettably, the Government has now missed an opportunity to transform BC\’s dysfunctional wine retail system into a model for the rest of Canada. Instead, we will be stuck with the status quo for at least another 2 years. That will make it difficult to solve the myriad of serious problems facing the industry. How will we fix the longstanding trade agreement problems with the distribution system which the EU and US are fuming about? How will we fix the inter-provincial shipping problems? Will the LDB finally create a level playing field and stop acting as wholesaler to both its own retail stores and the private stores with which it is in direct competition? How will the LDB meet its revenue target for next year (which is $100 million higher than this year\’s target) without increasing prices?


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