There’s more to privatizing NB Liquor than the financial implications

There’s more to privatizing NB Liquor than only the financial implications. Current business-driven discussions focus on how the private sector may be a more efficient retail operator, and whether the public would be subject to increased costs for a smaller range of products in the event of privatization. And in the financial category, the implications of replacing a government monopoly with a private sector monopoly is an issue for discussion. In an effort to review government’s options for generating revenue or reducing deficits, it’s easy to focus primarily on the financial elements of privatization.

There are also potential social costs associated with privatization.

Mothers Against Drunk Driving (MADD) claims that experience in other countries and in Canada indicates that privatizing alcohol sales will increase alcohol‐related deaths, injuries and social problems through increased alcohol availability and consumption.

According to MADD, provincial liquor boards provide society with a reasonable measure of control over alcohol pricing and accessibility, and thereby effectively manage alcohol consumption and alcohol related harm. “Provincial liquor boards offer customers high levels of service, quality and selection, along with a strong commitment to social responsibility which benefits consumers and non‐consumers alike,” says MADD.

Provincial liquor boards have intrinsic controls to protect and educate the public, such as ID’ing individuals under 25, refusing sales to intoxicated customers and alcohol abuse prevention initiatives. The current system is able to maintain rigorous enforcement levels because employees are properly and consistently trained. Implementing a system of private sales will require a significant government investment for training and monitoring of all retail locations to ensure compliance with the law.

A privatized system puts social responsibility programs at risk. A young clerk working in a convenience store is much more vulnerable to pressure to sell alcohol to an underage peer than a trained and experienced employee of a government liquor store. Similarly, a young clerk in a corner store is less likely to refuse service to a belligerent, intoxicated customer who demands that the clerk sell him alcohol.

Further, small businesses have a strong financial incentive not to refuse sales. Refusal of sale would weigh more heavily and present a financial burden on a smaller retailer than it would on a province‐wide network of stores. Regulations are better and more effectively enforced when the seller is not financially dependent on maximizing sales.

Finally, the provincial liquor boards have measures for accountability and transparency built into their structures. The same levels of accountability and transparency will be far more difficult to achieve within a loosely‐knit, widespread network of individual and independent retailers.

According to MADD, alcohol policy and revenue generation should be considered from a long‐term perspective to include the financial and social costs of alcohol‐related harm which “will rise dramatically with increased alcohol availability and consumption.”

MADD notes that cost estimate does not include “lost productivity costs which are not always measured” or “the human costs of alcohol‐related harm, in terms of needless deaths, injuries and illnesses and the associated physical pain, grief, or mental anguish.”

These potential social costs form a powerful backdrop to discussions about the financial implications of the privatization of all or part of NB Liquor. This does not even take into account, of course, that the welfare of the employees of NB Liquor should be an important consideration in its privatization. Governments have learned that the political costs associated with the resistance to  privatization can be very high indeed.

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