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Privatizing alcohol sales will increase alcohol-related deaths — Study

Public stores raise needed revenues while committing to social responsibility.

Boyd: Demand for alcohol is inelastic with regard to Straight Goods News staff

The government of New Brunswick has been toying with the idea of privatizing NB Liquor to generate much-needed cash to address the province's mounting deficit problem. Critics, however, point to Alberta — the only province to privatize fully the sale of alcohol — as proof that privatization has not better-served citizens.

Professor of management in the Edwards School of Business at the University of Saskatchewan, Colin Boyd obtained information from a comparison conducted by Edmonton's Integrated Marketing Solutions showing that Saskatchewan Liquor and Gaming Authority (SLGA) prices are lower than in Alberta on 70 percent of beers, 76 percent of spirits, and 86 percent of wines. Privatization has not saved Albertans money.

Boyd explains that demand for alcohol is inelastic with regard to supply. The amount of booze consumed does not increase with expansion of new stores. Instead, the cost of supplying liquor changes. Consumers pay the overhead costs for more premises and more retail employees.

  "Provincial liquor boards commit to social responsibility." — MADD

There are currently 1,000 additional liquor stores in Alberta than there were in 1992, when privatization began. Boyd says that Alberta's population has since grown by 42 percent, but the population per liquor store has dropped by 37 percent because of the huge increase in the number of stores.

"As a result, the average sales volume in hectolitres per liquor store in Alberta has dropped by 28 percent," confirms Boyd. "Over the same 18-year period, the annual sales volume per SLGA store has increased by a staggering 42 percent, indicating the very different rates of efficiency of liquor distribution between the two provinces."

Moreover, National Union of Public and General Employees (NUPGE) National Secretary-Treasurer Larry Brown underlines that while Alberta's expansion of private liquor stores has increased the revenue going to the provincial government by 179 percent in the past two decades, the Liquor Control Board of Ontario (LCBO) increased revenue for the province by 215 percent in the same period.

It seems that privatization has not helped sales efficiency, either.

Death toll increases

Now, evidence suggests that the privatization of alcohol sales may have a direct impact on Canadians' health. A new joint study by the University of Victoria's Centre for Addictions Research and the Prevention Research Centre in Berkeley, California, finds that a 27.5 percent increase in alcohol-related deaths occurs for every new private liquor store per 1,000 British Columbians. Grant Scott reports that the study examines 20 types of alcohol-related deaths — including liver disease, strokes, cancers, injuries, and suicide — in 89 local health areas of British Columbia.

The study compares data collected from 2003 to 2008, which Richard Watts reports is a period when the numbers of private liquor stores shot up compared with the relatively stable numbers of bars, restaurants, or government stores. In contrast, Scott indicates that the number of non-government liquor stores increased by 34.4 percent to 977 while government store numbers decreased by 10.4 percent to 199.

The study also finds that regions with more private stores than public stores have significantly higher rates of alcohol-related deaths.

Positive contributions

On the other hand, government-regulated alcohol sales agencies contribute positively to society. According to Brown, NB Liquor furnishes more than $160 million a year to help finance public services that improve quality of life. "Those revenues help reduce wait times in emergency rooms, create more spaces for early childhood learning, ensure clean drinking water and safe food, and build a better quality of life for seniors and persons with disabilities," says Brown.

Furthermore, CEO of the Carlisle Institute, a New Brunswick-based think-tank, Peter Lindfield notes, "NB Liquor was one of only five Atlantic Canadian companies to be named one of Canada's Top 100 Employers for 2011. NB Liquor also recently received the Retail Council of Canada's Excellence in Retailing Award for Retail Employee Development."

NB Liquor employs approximately 700 permanent and casual workers. Many of the jobs created by NB Liquor won't be replaced after privatization. Businesses concerned with their bottom lines will reduce the number of people employed in alcohol sales and decrease their wages. No private liquor stores will ever become model employers like NB Liquor.

In 2009, Mothers Against Drunk Driving (MADD) Canada issued a policy brief in opposition to the privatization of public liquor operations. "Provincial liquor boards offer customers high levels of service, quality, and selection, along with a strong commitment to social responsibility which benefits consumers and non-consumers alike."

Links and sources
  Alberta liquor is not cheaper
  Privatizing NB Liquor — A sobering second thought
  Liquor privatization a problem: study
  Study says alcohol problems in B.C. linked to rise in private liquor stores
  Taking NB Liquor public is an option
  Provincial liquor boards: Meeting the best interests of Canadians

Posted: February 09, 2011

  Public services

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