LCBO agency stores starve treasury of millions in revenues, Commission hears | National Union of Public and General Employees

LCBO agency stores starve treasury of millions in revenues, Commission hears

“What we have in Ontario is privatization of alcohol sales by stealth,” Christianson concluded. “We’re losing out on millions of dollars that could be spent on public services.”

Toronto (120 Jan. 2012) - Ontario is losing out on tens of millions of dollars in revenues each year because of the Liquor Control Board of Ontario's  (LCBO) program of privately-owned and operated agency stores, a management consultant told the Commission on Quality Public Services and Tax Fairness in Peterborough.

Consultant Russ Christianson has worked with numbers provided to him by the LCBO and has concluded in several reports supplied to the executives at the crown-owned agency, that the province is losing out on tens of millions of dollars in revenue each year because it refuses to repatriate agency stores by converting them to “real” LCBO outlets.

“If the LCBO brought these retail sales (currently going to privately-owned) back to their own stand-alone retail outlets the people of Ontario could benefit from an additional cash dividend in the range of about $350 million over the next 10 years,” Christianson told Commission chair Judy Wasylycia-Leis.

“The LCBO doesn’t even dispute the numbers,” Christianson went on. “They only shrug their shoulders as if to say, ‘what can we do?’ The fact is, the power to shut down agency stores and replace them with real LCBO outlets is a political decision by cabinet and this government refuses to move on the issue even though millions of dollars in revenue are at stake.”

Agency stores in Ontario were established almost 50 years ago to service remote and isolated communities north of the French River, where opening a real LCBO store did not make business sense. Since 1995, Christianson said, almost 150 agency stores have opened in southern Ontario – many bordering on the GTA.

Under their deal with the LCBO, private agency store operators pay 90 per cent of the regular retail cost on a product and pocket the remaining 10 per cent as their commission. Several of the larger agency stores – some located in stores like Sobey’s – do sales of more than $4 million annually resulting in a handsome profit for the private owner.

“What we have in Ontario is privatization of alcohol sales by stealth,” Christianson concluded. “We’re losing out on millions of dollars that could be spent on public services.”

Earlier in the day, United Steelworkers economist Erin Weir provided the Commission with data showing that a decade of reductions in the corporate tax cuts have failed to produce the jobs that defenders of the policy insist are needed to spur the economy.

“Corporate taxes are an essential component in our ability to fund good public services,” Weir told Ms. Wasylycia-Leis. “What the evidence shows, however, is that they do not spur investment, they are not required to stay competitive – we already have one of the most competitive tax rates among industrialized countries – and they’re definitely not creating jobs.”

The McGuinty government’s pledge to reduce Ontario’s corporate tax rate to 10 per cent will cost the provincial treasury more than $2 billion annually when fully in place.

The Commission also heard from the Ontario Health Coalition in a presentation by the Onario Health Coalition's (OHC) executive director, Natalie Maher who told Wasylycia-Leis that “reform” of the health care system has been going for more than 20 years and is “simply window dressing for more cuts to our public system.”

She said the people of Ontario should be very concerned with whatever Don Drummond recommends on changes to the health care system. She cited his 2010 TD Economics Report to the Ministry of Health and Long Term Care wherein he recommended a number of privatization initiatives, reduced coverage and, in some instances, would contravene the Canada Health Act.

“Ontario’s budget deficit is a result of tax cuts, not overspending on health care and other public services. As it stands, we already have one of the lowest per capita spending on health care in the country,” Maher told the Commission. “Compared to other provinces we spend $440 per person less than other provinces.”

She also noted that hospital spending has been shrinking in Ontario over the past 30 years, from 57 per cent of the provincial budget in 1981 to 37 per cent in 2011.

For Judith Richardson of the Peterborough Regional Health Centre, the time had arrived for government to put patient interests at the centre of the health care system.

“The government must aim to meet patients’ needs rather than providers’ needs,” Richardson told the Commission. “Organizations that fail to place the patient at their integration efforts are unlikely to succeed. The government wants to run public services more on a business model but we all know, as in any business, if the customer doesn’t come first, then the business will fail.”

She also pointed out that bad decision-making is costing Ontario’s health care system untold millions. Whereas management ranks have swollen and excessive CEO compensation is headline-grabbing, less funding is going to the frontlines where it is badly needed.

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