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August 18-31
VOL.14 ISSUE. 26

Booze Buzz

Lisa Johnson
Published Thursday February 21, 10:59 am
What does privatization mean for liquor in SK?

Last year more than 70 different liquor laws were “modernized” in Saskatchewan, including everything from rules permitting drinks in spas and movie theatres, to lessening restrictions on the degree of moisture in the t-shirts of adult performers in licensed bars.

But the biggest of the Wall Government’s liquor law overhauls was announced in December, as the Saskatchewan Liquor and Gaming Authority (SLGA) put out a request for proposals for two private liquor stores in Saskatoon, and one in Regina.

We already buy our booze through a mix of private and government-run stores, including hundreds of small businesses, hotels, brewpubs, at least one specialty wine store in each of Saskatoon and Regina, and 79 SLGA stores across the province. But with the more recent announcement that the government won’t build any new stores, ever, things got real.

Stores that are currently government-run will remain that way, the government has promised. But SLGA minister Donna Harpauer hasargued that Saskatchewan’s market has grown to the point at which private industry, rather than government, should be investing new capital in new stores.

Sure enough, there’s been “considerable interest from the business community,” says Colliers International research manager Duncan Mayer. But, he says, “we’re limited by available retail zoned land in this city,” particularly in those areas in which the demand is now very high, such as Blairmore, Stonebridge and other developing neighbourhoods.

Expect to see contracts awarded before April, and don’t be surprised if they go to out-of-province entities. Mayer knows that a variety of groups have pursued space requirements from 1,200 to 20,000 square feet — “a whole mix of types of people, ranging from individuals that own liquor stores in other provinces to large corporate grocery stores.”

It’s one piece of a tasty pie, as retail sales of booze in this province have increased by more than 40 per cent since 2006, according to the SLGA.

Of course, there are very good arguments both for and against offering more private retail opportunitiesin this province.

There’s no denying that liquor stores in Alberta have the triple advantage of convenience (some outlets are open until 2 a.m.), selection (they carry thousands more products, some in specialized stores), and general affordability.

However, the popular belief that Alberta liquor prices are lower doesn’t always hold true. For example, it’s cheaper to skip across the border to pick up a case of low-end wine ($10.99 for a bottle of Apothic at an Alberta Liquor Barn, compared to between $15.24 and $16.99 at an SLGA outlet) or bargain beer, such as 24 cans of Boxer “Lager” for $23.99.

Spirits are generally cheaper in Alberta, as well — especially when they’re on special. A 750mL bottle of Wiser’s DeLuxe now costs at least $4.46 less in Alberta than here. But listed Alberta prices exclude GST (5 per cent) and bottle deposits (anywhere from 10¢ per can to 40¢ per bottle), which at about $2.20 can almost split half of that price difference, whereas the SLGA always lists their prices with tax and deposits included.

And here’s the interesting part: SLGA noticeably balances the extremes, making cheap drinks less cheap, while making high-end products more accessible. In a Liquor Barn or Liquor Depot in Alberta, for example, you’ll find a bottle of Joseph Phelps Cabernet Sauvignon for $73.99-$76.99, or a Caymus Vineyards Cabernet Sauvignon Special Selection for about $242.99 (both depending on the vintage). At an SLGA store in Saskatoon, those same names list for $59.00 and $119.99, respectively. (Again, add 5 per cent GST and a bottle deposit to the advertised Alberta prices.)

The three new private stores will be able to set their own prices only to a certain degree; they’re still bound to SLGA controls and regulations. That means that minimum pricing, such as small price tweaks to discourage the sale of normally cheap high-percentage alcohol products, will still be in effect.

So how will these three new stores compete with existing outlets?

They’ll be allowed to remain open longer, and they might even be allowed to offer conveniences such as ice and soda. But the biggest competitive advantage will probably come from a reduction in wages, says Saskatchewan Government and General Employees’ Union (SGEU) president Bob Bymoen. It’s a classic race to the bottom.

“[SLGA employees] aren’t overpaid. They are getting a [decent] hourly wage. But if the private sector pays $5 an hour less, that puts less money into the community. How is that good public policy?” says Bymoen.

The changes could also spell a significant loss for hotel or bar operators, some of whom have made investments in their after-hours off-sale outlets based on the current regime of alcohol sales.

But Bymoen says that’s the least of the problems.  “The biggest thing is the loss in revenue to the government. If someone tries to tell you that there isn’t, they’re either misleading you or they don’t get it. Public liquor sales generate revenue for the government that helps fund schools, hospitals and roads. Public liquor stores contributed $173.6 million to government in 2007-08,” Bymoen says. And by now, that number is closer to $200 million per year, he says.

Harpauer and others have said that allowing private liquor store sales won’t cost the provincial government any revenue.

“A markup is really just another form of tax, which a province can keep with or without a monopoly — as Alberta did after privatization,” says the Frontier Centre for Public Policy. And plenty of other studies support the fact that the Alberta government brings in more per capita on liquor sales than its Saskatchewan counterpart.

But, the numbers tend to buckle depending on who you ask. Since Alberta opened the door to private liquor sales in 1993, the province has lost $1.5 billion in revenue, the Parkland Institute says.

“When it comes to purchasing alcohol, a company purchases it, it goes through the SLGA warehouse, and it’s then distributed. At that point in time the government can tax everybody the same, whether you’re a public or private store. That’s revenue-neutral. But when it comes to the actual sale of alcohol in the store, a private corporation is going to pay 10 per cent in tax on their profit, but the other 90 per cent of that profit is gone,” says Bymoen.

“It isn’t taxed — it’s distributed to shareholders. The province is out that money. If a store is owned by the province, and turns a profit of $100,000 for example, the government gets all of that – not just $10,000,” he says.

Does the government’s announcement mark a startling policy shift? Nope. It might be unexpected, given the promises made in 2007, but it’s incremental, and most people in this province probably won’t even notice that the government just washed its hands of a lucrative stake in the booze biz.

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