Nfld. & Labrador

Liquor monopoly won't be privatized, says N.L. finance minister

The private sector played a critical role in beefing up booze sales in Newfoundland and Labrador during the pandemic, but the finance minister says he won't hear talk of privatization.

Critics say success of private stores during pandemic is proof that privatization should be considered

The debate over whether the N.L. Liquor Corporation should be privatized has resurfaced, with some familiar voices on both sides of the issue. (CBC Newfoundland and Labrador)

The private sector played a critical role in beefing up booze sales in Newfoundland and Labrador during the pandemic, but the finance minister says he won't hear talk of privatization.

"Not interested," Finance Minister Tom Osborne told CBC News.

"I'm not going to sell out future generations for a short-term benefit today."

N.L. Finance Minister Tom Osborne says he's not interested in any discussion about privatizing the province's liquor corporation. (Sherry Vivian/CBC)

Unsurprisingly, the union that represents most of the nearly 600 employees at the Newfoundland and Labrador Liquor Corporation also bristles at the idea.

"Why would they get rid of something that generates clear profit for the people of Newfoundland and Labrador?" asked Jerry Earle, president of the Newfoundland and Labrador Association of Public and Private Employees.

There's been a long-running debate in the province over whether the government's monopoly over the importation, distribution and sale of liquor, wine and beer should be handed over to the private sector.

Business groups and some academic leaders have long championed the idea of privatizing the business, with the provincial government collecting revenue through taxation as the free market does its work.

Jerry Earle, president of the Newfoundland and Labrador Association of Public and Private Employees, is adamantly opposed to any talk of privatizing the province's liquor corporation. (Sherry Vivian/CBC)

But the NLC turned over nearly $184 million in dividends to the government last year, and NAPE members are public servants who enjoy stable employment, benefits and above-average wages for those working in retail.

So the two sides are about as divided as a liquor store's rum and whiskey sections.

"They see this as an avenue to make money at the detriment of the province," Earle said of business leaders who support privatization, while the province's finance minister touted the need for a flow of cash from booze sales under a pandemic that all but halted the provincial economy.

"At this particular time I would argue that reliable, constant source of revenue is more important than ever," said Osborne..

Anti-drunk driving groups like MADD Canada also support the liquor board model because, according to a policy document, it "protects the public interest and meets consumer needs through safe and responsible alcohol sales."

But the behaviour of consumers during the pandemic has reignited the discussion, with privately owned Liquor Express stores recording phenomenal sales figures during March, April and May.

Despite the fact that bars and restaurants were closed, and the 29 Crown-owned corporate and satellite stores were restricted to online and telephone orders, overall sales surged by 11 per cent over the same period last year.

That's because customers flocked to the 144 Liquor Express stores, which can be found throughout the province in gas stations and convenience stores, where people were still able to walk inside and pick up their adult beverages.

Vaughn Hammond of the N.L. branch of the Canadian Federation of Independent Business says the provincial government should explore the possibility of privatizing the NLC. (Terry Roberts/CBC)

These stores are operated by private businesses under licence from the NLC, but must purchase their inventory from the corporation, and sell it at prices set by the NLC.

"Look at it. Review it. Understand what the last three months have been about. And whether there truly is apprehension about the whole idea of privatizing the NLC," said Vaughn Hammond of the Canadian Federation of Independent Business.

Memorial University economist Wade Locke went further, saying, "There is no obvious and legitimate public policy rationale for having public sector ownership of liquor corporations."

Both Hammond and Locke say it's time for the government to explore the possibility of selling off its monopoly on booze sales to the private sector, perhaps beginning with an expression of interest.

"It's either we start to consider and think about it now, or maybe it gets to a point in the future where we simply have no choice," said Hammond.

Economist Wade Locke, a professor at Memorial University, supports privatizing the NLC. (Gary Locke/CBC)

Locke sees the liquor corporation as a very valuable asset that could help the government deal with an unprecedented fiscal crisis that has been exacerbated by a major winter storm and the ongoing COVID-19 pandemic that has battered the provincial economy.

He is not kind in the way he describes the current government's approach to that crisis.

"We have a government who, right now, doesn't seem to want to deal with the expenditure problem they got. Or create other kinds of hassles for themselves while they're limping towards an election," said Locke.

Locke says the province could fetch a massive amount of money from a sale of NLC assets, and continue to enjoy big annual returns through a special tax on booze.

The Newfoundland and Labrador Liquor Corporation turned over nearly $184 million in profits to the provincial government in 2018-19, on revenues of $330 million. (Sherry Vivian/CBC)

But the province has no plans to even entertain the idea, with Osborne using the example of privatization of liquor stores in Alberta as a reason for maintaining the status quo.

"To dispose of the NLC would … have an impact on future generations by having less income for the province," he said.

Osborne is more interested in offloading money-losing government assets like the Marble Mountain Resort in Corner Brook, and the Pippy Park golf course in St. John's.

"There are areas within government that I'm open to suggestions. NLC is not one of them because it's a very solid source of revenue," said Osborne.

Read more from CBC Newfoundland and Labrador

About the Author

Terry Roberts is a journalist with CBC's bureau in St. John's.

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