Choose Your Booze

Bob Bymoen, president of the Saskatchewan Government Employees Union, writes in the StarPhoenix:

We assume that people we elect to run our province will make logical decisions.

Bob Bymoen assumes this. “Logical” people don’t.

Yet at a time when underfunding is forcing our universities to cut programs and hospitals to postpone surgeries, the provincial government has decided to give up a substantial source of revenue with a policy that says all new liquor stores will be privately owned.

Apparently, “not taking in potential revenue” = “giving up revenue”.

The government’s rationale is that public funds are better spent on education, health and infrastructure than on building liquor stores. If you think about it for a moment you realize that it doesn’t make sense.

That we require unionized employees to stock liquor onto shelves and ring in tills doesn’t make sense either, but please go on.

Public liquor stores actually make quite a lot of money for the province – $218 million last year. In the past five years, public liquor stores contributed more than $1 billion in net profit – over and above the taxes on alcohol sales. That’s hundreds of millions that can be invested in schools, hospitals, universities or long-term care homes.

Selling liquor stores can be profitable for the government too, particularly if they are already profitable, and don’t forget that private liquor vendors would also have a chance to be profitable. Statists like Boemen conveniently forget to mention that private-sector profits also benefit society — moreso, I might add, because this profit re-investment doesn’t come with the typical redistributionist markup.

Or, for that matter, the 24% year-over-year increase in to liquor-store employee salaries, wages and benefits (see Schedule 2).

Public liquor stores are such a good investment for taxpayers that the TD Bank’s former chief economist Don Drummond warned the Ontario government in a 2012 report against selling them.

If the public liquor-store monopoly were only in place to raise money for the government, then why don’t we just nationalize all profitable industries, like food distribution, oil companies or real estate? (Don’t answer that, Bob.) That way, the government can take all the profits from all the industries and distribute it and take care of us and we would have no worries.

The Wall government claims it will keep our existing public stores, but the experience in other places tells a different story. In the 10 years since British Columbia allowed private liquor retailers, 24 public stores have closed. A recent study shows B.C.’s private stores have the highest liquor prices among the three western provinces.

In other words, the state-owned liquor monopoly is so good at its job that it requires a state-enforced monopoly to survive.

Our elected leaders need to think logically and act in the best interests of Saskatchewan people.

Damn straight.

First, they can start by separating the regulatory function of the SLGA from the purchasing (“upstream”) and distribution (“downstream”) arms. The current system creates an unethical conflict of interest. As with any self-regulating industry (as opposed to market-regulated industries), the incentive among the SEGU guild members and SLGA management, whether they would admit it or not, would be to cover up their fellow employees for any misgivings. This is not to say nefarious goings-on are going on, but current situation can reasonably be perceived as a conflict of interest. If a particular monopoly regulates itself, then why bother having a regulator?

Second on the list is to allow permits to private retailers and to sell off all government-owned stores altogether. I’d suggest making an offer to union members to purchase the government-run stores so as to encourage their support for reform. I would also remove the cap on specialty stores and any remaining limits on store numbers or placement. Not only would this move remove the regulatory conflict of interest but it would spur investment in new stores.

Alberta gets this part right. I used to live on Calgary’s trendy 4th Street SW which features condos, apartments, restaurants, small shops, a couple of pubs. In between 17th and 26th avenues, there were no less than three liquor vendors — an upscale wine merchant and two conventional beer and booze stores featuring more modest fare and markup. Beyond that stretch, there were at least a couple of other liquor (i.e. more than just beer and wine) stores within walking distance, and even a few more located between my downtown office and home. In other words, the stores offered me not only a variety of selection and price, but also convenience.

And fewer 0.5% sales

Also, fewer 0.5%-off sales

As an illustration, a recent report from the Alberta Gaming and Liquor Commission has shown that the number of liquor vendors since privatization has increased almost 250% while the variety of product has increased from 2,200 to a whopping 17,741.

Meanwhile, Saskatoon features pretty much the same number of liquor stores to which I once had regular access in the entire city. In a time of unprecedented growth and prosperity, Sask Liquor has only built one new store in Saskatoon in the past decade. That Broadway Avenue, Saskatoon’s street most analogous to Calgary’s 4th Ave. with its shops and pubs, walkable blocks and hipster clientele, doesn’t have its own liquor store speaks for itself.

I might also mention that during all my time in Alberta, I never once saw a lineup to get into a liquor store:

You can’t spell “licensed monopoly” without  L-I-N-E-S

Third, what Alberta didn’t get right was with its liquor wholesale purchasing system. In 2006, notable shortages in liquor were caused by issues at the provincial warehouse. While the warehouse is privately operated, wholesale distribution still operates by a government-enforced monopoly, which has resulted in supply bottlenecks and a poorly responsive distribution of product.

If Saskatchewan were to go this route, they must not stop at private liquor stores; they must also get out of the monopolized wholesale purchasing business. Again, it would not only remove the regulatory conflict of interest, it would allow for vendors and distributors to purchase goods in a more efficient manner.

Finally, if this province were to truly attempt to unshackle themselves from the statist/temperance yoke, it would discontinue the practice of segregating booze from other consumable items — in other words, allow for liquor sales in any commercial outlet. You can buy smokes anywhere, lottery tickets too. Both sets of items are prohibited to be sold to minors. If we trust private vendors to check for IDs in this circumstance, then there is no reason they cannot be entrusted to check IDs in selling liquor as well.

Now, I do not believe for a second that the provincial political climate is ready for such a radical change to allow adults to be treated like adults. Therefore, on the point of feasibility, I would be willing to drop the latter recommendation.

I do believe, however, that the good people of Saskatchewan are ready and willing to accept an increased liberalization which would include private-only vendors, the sale of provincial stores, and the dismantling of the provincial wholesale purchasing monopoly. This would result in increased convenience, better selection and more freedoms, not to mention one less area of social policy for Bob Bymoen to bitch about.

Everybody wins!

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