Could Ontario privatise LCBO?

Posted : 10/01/2018


Source: https://www.thedrinksbusiness.com/
by Rupert Millar
28th September, 2018

The parlous financial state of Ontario has led to the suggestion that the local government generate money by selling off provincial business enterprises including liquor monopoly LCBO.

A review commissioned by premier Doug Ford (brother of Toronto's troubled former mayor, the late Rob Ford), has suggested that the Ontario government either sell off part or the whole of various Crown corporations in order to generate short-term cash relief.

Conducted by EY Canada, the audit stated: "Ontario currently holds assets that could be monetized to generate a one-time cash payout by selling all or a portion of GBEs (government business enterprises) and/or owned real estate."

The three main Crown corporations in the province are: the Liquor Control Board of Ontario (LCBO), Ontario Power Generation and Ontario Lottery and Gaming.

"Taking decisive action is the only way forward to put Ontario on a sustainable fiscal footing," the report continued.

"Such opportunities should not result in involuntary job losses, and instead focus on efficiency and effectiveness improvements."

The Ontario government responded to the report saying the range of ideas proposed was "pretty comprehensive", and that it would consider all options.

The fiscal deficit for this year is in the region of CA$15 billion, which Ford says is the legacy of the previous Liberal administration.

Tempting as a fire sale of government assets may appear, the EY report did underline the fact that gains may only be short term and the longer-term impact on the government may outweigh the benefits.

"It is important to understand that the trade-off is foregoing future income," said the report. "Robust business cases firmly rooted in evidence are required before proceeding."

Although the idea of the LCBO being privatised may seem far-fetched, the previous government of Ontario sold off Hydro One in 2015.

Given Canada's rising status as a consumer of wine, the idea of the country's biggest importer and distributor potentially falling into private hands must be an intriguing one to contemplate, not to mention the effect it may have on galvanising inter-provincial wine, beer and spirits trading.


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