Government Monopolies on Liquor Retail Are Not the Answer

My latest Calgary Herald column makes the case that when it comes to retail, we should treat alcohol like tobacco:

It may not always result in wise policy, but governments in this country have taken on the role of discouraging tobacco consumption.   Governments may go too far at times, but through taxation and other policy initiatives, we’ve brought about a reduction in smoking rates in Canada.
And while we have seen some intrusive and confusing interventions into the retail market (for example, governments turning cigarette packages into anti-smoking billboards, but then banning the retail display of those same packages), at no point has anyone seriously entertained the idea of government becoming the retailer.
It’s a delineation that works. The retailing of tobacco is left to the private sector — through grocery stores, convenience stores, even specialty tobacco shops — and governments set and enforce the conditions under which it can be sold and to whom it can be sold.   Given that the consumption of alcohol is much more socially acceptable than the consumption of tobacco, there’s no reason why we cannot apply the tobacco model to the sale of alcohol.
Certainly Alberta has made bold reforms in the privatization of liquor retail, but we can and should go further.   Instead, however, the message we heard last week from two left-leaning think-tanks is that Alberta has gone too far already.   As Saskatchewan Premier Brad Wall entertains the idea of allowing future liquor stores to be privately owned (but leaving in place the existing publicly owned liquor stores), the Parkland Institute and the Canadian Centre for Policy Alternatives are coming to the aid of their public sector allies who are fighting to maintain the status quo.
In a joint report entitled Impaired Judgement: The Economic and Social Consequences of Liquor Privatization in Western Canada, the organizations make a case that Saskatchewan’s government monopoly on liquor retail offers the best of all worlds: lower prices, lower consumption, higher revenue and reduced social harms.   It is a surprisingly weak case, making one wonder if their conclusion resulted from the evidence or if the evidence resulted from their conclusion.
For starters, a report that castigates Alberta and B.C. (where a hybrid private-public system exists) for allegedly ushering in increased social harms manages to overlook a very serious social harm related to the consumption of alcohol. According to MADD Canada’s most recent report on the matter, Saskatchewan has Canada’s highest per-capita rate of impaired driving deaths.   That’s not to say that government-run liquor stores are to blame, but one can be fairly certain that if that dubious distinction went to Alberta or B.C., this report would have trumpeted that fact.
But the underlying assumption here is that increased consumption leads to increased social harms. Even if one accepts that premise, it is not an argument in favour of a government monopoly on the retail of alcohol, as the tobacco model shows us. If governments wish to discourage consumption or raise additional revenues, it has the wherewithal to do so without having to go into the liquor retail business.
What’s striking here, however, is the same report that praises Saskatchewan for mitigating harm reduction also boasts of lower alcohol prices in Saskatchewan. A government monopoly can ensure low prices for consumers or it can focus on discouraging consumption and mitigating social harms. It cannot do both.   The authors state quite clearly that “if liquor is cheaper and easier to find, more will be consumed.” Yet, we’re also informed that public stores in Saskatchewan and B.C. offered the lowest prices.   The report, though, concedes that Saskatchewan’s rate of consumption is nearly identical to B.C.’s, and it also fails to mention that Alberta’s rate of consumption declined after privatization.
While these two think-tanks would have us go back to the days of government-owned liquor stores operating under banking hours in nondescript brown buildings, they fail to make a case that it benefits anyone beyond the public sector unions whose members would staff these outlets.   Genuine competition can and will lower prices. Governments can then choose whether to offset those savings through taxation.   Saskatchewan would do well to follow Alberta’s lead, but our lead isn’t good enough. If we can trust grocery and convenience stores to sell cigarettes, we can trust them to sell beer and wine.