This week, Premier Doug Ford suggested that the head of the Ontario Public Sector Employees Union was “lying.” OPSEU head JP Hornick responded in kind, saying that Ford is “lying to Ontario about LCBO privatization.” Earlier this week, LCBO workers staged a day of action with protests outside of the constituency offices of numerous PC MPPs as the union enters negotiations for its next collective-bargaining agreement.
The most recent press release from OPSEU lays out the particulars of its charges against the Ford government — namely, that a number of aspects of the LCBO’s operations that used to be done internally by OPSEU members (including some warehouses and the company’s internal printing) are now being contracted out to private firms. But the biggie — the first item on OPSEU’s list — is the privatization of liquor sales.
“When the LCBO sells alcohol, the profit – $2.5 billion every year – gets invested in public services like health care and education,” the press release states. “When big box grocery stores are allowed to sell alcohol, the profit from those sales go into the pockets of their corporate CEOs.”
It’s certainly true that the LCBO provides more than $2 billion in its annual dividend to the provincial government, and this fact has a kind of totemic status in Ontario politics: the LCBO provides reliable non-tax revenue to the treasury — plus another $600 million or so in provincial alcohol-tax revenue — making it both a golden goose and a sacred cow. All told, Ontario nets around $3 billion from booze sales, with the large majority of that coming from the LCBO’s dividend.
(Given the way we talk about the LCBO’s dividend, you could be forgiven for being surprised if you’ve never been told that the LCBO also provides a substantial revenue stream to the federal government. Ottawa doesn’t co-own the LCBO or anything, because governments don’t actually need to own a retail channel to make money from the sales of goods and services: they can simply tax them, and that’s just what the feds do, to the tune of $1.6 billion in fiscal year 2021, according to the LCBO’s annual report.)
The future of employment at the LCBO is naturally on the union’s mind, given the government’s belated pledge, last year, to eventually make good on the PC party’s 2018 election commitment to liberalize wine and beer sales outside the LCBO and Beer Store duopoly. At the margin, every sale that doesn’t happen in an LCBO store is going to mean less demand for hours of work from OPSEU members.
It’s probably not going to mean less money for the Ontario government, however. And it could end up meaning more, for a few reasons. The first is simply that any sale that happens outside the LCBO’s retail stores is also not incurring the costs of running those stores, and running a large retailer is actually very expensive.
Secondly, the retailers who do sell wine will still be buying from the LCBO, the province’s only wholesaler. (Beer purchases will go through the Beer Store for at least five years.) Thirdly and finally, LCBO retail outlets will remain the only place to buy spirits, and this shouldn’t be understated: spirits alone make up $2.6 billion of LCBO sales, about as much as it makes from wine and much more than it makes from beer or coolers.
From the perspective of Ontario’s cashflow, there’s very little to worry about here. Non-LCBO retailers will still be kicking substantial sums to the provincial treasury, either through the LCBO as wholesaler or via taxes, while retail sales at the LCBO will end up more focused on the higher-margin spirits, and wholesale operations will be as busy as ever. The bigger public-policy problem could be the increases in alcohol’s antisocial public-health effects if consumption goes up overall — but from the perspective of the finance minister, to whom the LCBO reports (a fact that never stops amusing), it’s all just more money.
None of this, however, is likely to be any consolation to OPSEU’s members, since this all probably does mean a future with fewer, smaller LCBO locations employing fewer workers overall. But that’s an inevitable consequence of demoting the agency from its current role in the liquor market, and that’s a policy decision that numerous governments have been toying with since before I had mastered addition and subtraction. Ford has finally bitten the bullet. And while future governments may be more or less generous to OPSEU in future negotiations, it’s unlikely that any of them will reverse the decision, which comes into effect no later than January 1, 2026.
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