Public Values

Ontario using program meant to serve rural communities to privatize liquor sales

Agency stores run for private profit popping up in urban areas.

Christianson: What we have in Ontario is privatization of alcohol sales by stealth.TORONTO, ON, January 20, 2012: Ontario is losing out on tens of millions of dollars in revenues each year because the Liquor Control Board of Ontario (LCBO) has a program for privately owned and operated agency stores, a management consultant told the Commission on Quality Public Services and Tax Fairness in Peterborough.

Consultant Russ Christianson has worked with numbers provided to him by the LCBO and has concluded in several reports supplied to the executives at the crown-owned agency that the province is losing out on tens of millions of dollars in revenue each year because it refuses to repatriate agency stores by converting them to real LCBO outlets.

  "This government refuses to move on the issue even though millions of dollars in revenue are at stake."

"If the LCBO brought these retail sales (currently going to privately-owned) back to their own stand-alone retail outlets, the people of Ontario could benefit from an additional cash dividend in the range of about $350 million over the next 10 years," Christianson told Commission chair Judy Wasylycia-Leis.

"The LCBO doesn't even dispute the numbers," Christianson went on. "They only shrug their shoulders as if to say, 'what can we do?' The fact is, the power to shut down agency stores and replace them with real LCBO outlets is a political decision by cabinet, and this government refuses to move on the issue even though millions of dollars in revenue are at stake."

Agency stores in Ontario were established almost 50 years ago to service remote and isolated communities north of the French River, where opening a real LCBO store did not make business sense. Since 1995, Christianson said, almost 150 agency stores have opened in southern Ontario — many bordering on the GTA.

Under their deal with the LCBO, private agency store operators pay 90 percent of the regular retail cost on a product and pocket the remaining 10 percent as their commission. Several of the larger agency stores — some located in stores like Sobey's — do sales of more than $4 million annually, resulting in a handsome profit for the private owner.

"What we have in Ontario is privatization of alcohol sales by stealth," Christianson concluded. "We're losing out on millions of dollars that could be spent on public services."

Links and sources
  LCBO agency stores starve treasury of millions in revenues, Commission hears

Posted: February 02, 2012

Categories:
  Public services

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