Privatizing NLC could raise cost of booze, put minors in peril, says MADD
Public safety could take a hit if NLC sold: critic
Mothers Against Drunk Driving is warning of dangerous social consequences if the provincial government moves ahead with a recommendation to sell off the Newfoundland and Labrador Liquor Corporation.
The premier's economic recovery team suggested in its report last month that the government should consider selling or contracting out "one or more" of the Crown corporation's lines of business, such as retail, blending and bottling, or warehousing.
MADD Canada CEO Andrew Murie told CBC Radio's On The Go his organization is in favour of the government holding onto the NLC for reasons that aren't just about the money.
Murie said in places such as Alberta, British Columbia and areas of the United States where privatization has occurred, there has been a drop in what he calls "social protection" and public safety.
"Serving minors, serving intoxicated people — it's just been clearly shown that people that have no profit motive do a better job, and it's part of their job to do that social protection piece," he said.
In response to people who say a privatized liquor corporation will offer consumers lower prices and a wider selection of alcohol, Murie said for every privatization that has already happened, the result has been the opposite of what consumers were expecting.
"The best case example is Washington state. What the consumers were left with was less choice because it's costly to have a wide inventory," he said.
"The second thing is the government said, 'Well, if you're forcing us to privatize … we're going to take our piece of the pie and the consumer is going to pay the profit for the private operator.' In that case they're actually paying way more money. So what they thought they were getting, they weren't getting at the end of the day."
Tom Cooper, a professor in strategic management at Memorial University, said there are pros and cons to selling the NLC.
The corporation provides a good dividend that will attract investors, but the province would lose that revenue in the long term by selling, generating only short-term cash.
The NLC generates about $190 million in revenue annually.
However, Cooper said, because the province is facing a financial crunch, it could be a good time to sell.
"Given demographics, given social trends, given how people consume alcohol, where they consume it, why they consume it, it may be going down," he said. "So the dividend is not something that's certain that's going to be there in 15 or 20 years."
A potential sale comes down to timing as the province needs to dig itself out of debt, said Cooper, but in an ideal world the government would likely want to hold onto the asset.
"If you can get a fairly large amount of money for that, that may reduce some of the pressure on you and your ability to raise funds in the debt markets," he said.
"There's maybe more a strategic question … is this a good time to exit a market?"
With files from On The Go