Conflict over the future of liquor retailing in Saskatchewan is heating up again as Sobey's has opened the province's second fully private liquor store in Saskatoon. The first, operated by Coop, opened in March.
The government's decision to licence four private stores in the province incensed the Saskatchewan Government Employees Union (SGEU). At the same time the Sobey's liquor store was opening its doors, the union started running TV commercials urging voters to lobby their MLAs to keep liquor sales public.
"Public liquor sales return huge profits to Saskatchewan people-$252.3 million last year, and over $1.1 billion in the last five years," said Donna Christianson, chair of SGEU's Saskatchewan Liquor and Gaming Authority (SLGA) negotiating committee. That's money that can be used to fund services we all care about, like hospitals, schools, highways, and long-term care homes.
"Money earned by our province's liquor stores helped cover the unforeseen costs of clean up after the summer flooding. Liquor sales provide revenue that is there for Saskatchewan people when we need it. Why would we want to turn that stable source of income over to private companies?"
Don McMorris, minister responsible for SLGA, disputes the idea that privatizing liquor sales will necessarily impact government revenue.
"I've seen the ads and it's a pretty general statement that they make," he said. "I'm not sure they've got the numbers to back it up. Alberta has shown through their experience that they are revenue neutral or even revenue positive. The whole thing you have to remember is that we're still the wholesaler, we control the markup, we still control what discounts private vendors get and private stores get, so we still have control over the amount of revenue we bring in as a government. That being said, it is a debate and we look forward to having it as the weeks and months pass."
Playing into that debate will undoubtedly be a 2012 report entitled Impaired Judgment: The Economic and Social Consequences of Liquor Privatization in Western Canada by the Canadian Centre for Policy Alternatives that compares the liquor retailing models in Saskatchewan, Alberta and BC.
"In 2011, despite having the highest per capita consumption of the three provinces, Alberta had the lowest per capita revenue from liquor sales," states the report, which was commissioned by SGEU. "Strikingly the tax revenue generated per litre of alcohol sold in Alberta has declined dramatically in the years since privatization. By not maintaining the 1993 level of tax revenue per litre of alcohol sold, the Alberta government has foregone nearly $1.5 billion."
According to the report, it is not just about the money, however.
"The evidence provided in this study indicates that a public monopoly of liquor distribution provides the most effective mechanism for rationally managing the consumption of alcohol," it states. "That is, a public monopoly is most capable of maximizing the economic return to the public purse while limiting social harms and their costs."
McMorris was not familiar with the report, but was not impressed by the comparison.
"Right off the bat I question the study if they're using Saskatchewan at one extreme and Alberta at the other extreme because the vast majority of outlets that sell alcohol in Saskatchewan are private," he said. "There's only 70 stores out of 660 places to buy alcohol that are public. There are liquor vendors in every corner of the province, private liquor franchises that are run by businesses, so it's not like there isn't private delivery within the system. The vast majority is through the private system."
There was no question both Saskatoon and Regina needed new liquor stores. The decision to make them private was a practical one, McMorris said.
"The government was more interested in putting the money for capital into schools and hospitals and roads rather than into building new liquor stores when the private section can do that. That's been our decision, whether we should go further, that is the debate."
According to Canadian Business magazine, where privatization has been tried, there have been unexpected economic benefits.
An article from April 2014 cites a four-fold increase in employees in the Alberta retail sector. More interesting, according to James Cowan, the author, was the impact private sales had on B.C.'s wine and beer industries.
"Back in 2001, B.C. had 66 wineries and zero craft brewers, compared to 214 and 30 today," he states. "Through private competition, the province effectively created more shelf space. There are roughly 1,000 wines currently produced in B.C. but government stores stock only 260 of them, according to a speech given last year by Ian Baillie, executive director of the B.C. Alliance of Beverage Licensees. The remaining 740 were sold through private stores."
McMorris has not anticipated the potential growth of those industries in Saskatchewan, but he does see the demand.
"What we really look at is not so much that end of it, but what does the customer want and I think if you look at the private stores that are in Saskatoon already and two to come in Regina, is that they're really catering to the craft beer industry," he said. "There's huge, huge selections there for customers so it's really about giving customers more of a choice into the future."
The minister does not rule out a role for SLGA in that regard either.
"SLGA certainly can," he said. "It hasn't been kind of their focus in the past. There is some craft beer, not to the extent of the private stores, but it could be something that SLGA would look at into the future as we move forward depending on the makeup of the model of the retail of alcohol."
