Beerstore

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Saturday November 15, 2014

Beer Store should pay more to province, says privatization czar

Premier Kathleen Wynne’s government is threatening to take away the privately owned Beer Store monopoly if brewers balk at paying a “franchise fee” to the province.

That’s according to Wynne’s privatization czar, former TD Bank chair Ed Clark, who tabled a report on public assets Thursday that recommends modernizing booze sales.

While Clark cautions against selling off the Liquor Control Board of Ontario, he said the province could “free up $2 billion to $3 billion” to fund transit by liquidating parts of Hydro One.

More controversially, he said The Beer Store, owned by AB InBev, MolsonCoors, and Sapporo, will have to cough up more money to Queen’s Park without raising prices for consumers — or else.

“Their position is that they can’t afford to absorb a tax,” Clark told reporters in a conference call after releasing his 77-page study, “Retain & Gain: Making Ontario’s Assets Work Better for Taxpayers and Consumers.”

“If we do decide to charge a franchise fee of some sort (and they say) they don’t have any room, they’re just right up against the wall here and they don’t have a dollar to give . . . we’re saying, ‘Well, then that means you’re really saying is that this franchise that you have is worthless. Would you then give it up?’ ” said Clark.

“And then they say they don’t want to, but they don’t want to pay for it. We don’t think that’s a reasonable position. If you really think this thing is valueless, then give it up and we’ll auction it off and see if people would pay something for it.”

Clark’s salvo, which went further than anything in his premier’s advisory council on government assets’ report, caught the breweries off guard.

“Beyond what’s in the report, we haven’t seen anything from the council on that issue at all. We haven’t received anything that speaks to (those) comments,” said Jeff Newton, president of Canada’s National Brewers, which runs the 448 Beer Stores across Ontario.

The panel report said the LCBO, the government’s 639-outlet liquor monopoly, should be allowed to sell 12-packs of beer instead of just six-packs. That would help craft brewers, though cases of 24 would still be exclusively sold at The Beer Store.

“We believe that the relationship between the provincial government and The Beer Store should be revised to ensure that Ontario taxpayers receive their fair share of the profits from The Beer Store,” the report said.

“Consumers should not see an increase in prices as a result of this change.”

But Newton argued The Beer Store and the breweries, which employ 9,600 people in the province, cannot absorb any levy because “at the end of the day those costs have to go somewhere.” (Source: Hamilton Spectator)