Privatization and BC wine pricing in the news

July 16, 2012 Comments Off
Privatization and BC wine pricing in the news
Consumers want choice and good value -- BC can lead the way

BC wine consumers and voters really only care about two things: selection and pricing

The BC Government's liquor privatization project (the Distribution of Liquor Project or "DLP") has been in the news a great deal this past week, getting increasingly negative coverage. Many commentators have correctly identified that the existing government monopoly system is inefficient and flawed but have criticized the DLP process for a lack of transparency and failure to consult with both the public and industry. In addition, some have questioned the scope of the reforms being put forwards and the wisdom of replacing a public monopoly with a private one (particularly given that the new operator will be bound by existing BCGEU labour contracts and costs). There have been many stories but see in particular: multiple stories by Bob Mackin in BIV and the Tyee, multiple columns by Vaughn Palmer in the Vancouver Sun as well as a critical Sun editorial piece, Liquor monopoly silences competition, plus another editorial and other coverage of the issue by Bill Good on CKNW.

It is hard to argue with the criticism of the process. However, there is no doubt that the entire system is in dire need of reform. Unfortunately, it now appears that another opportunity to modernize and reform our outdated liquor distribution system is about to be lost due to poor policy making and implementation at the bureaucratic and political levels. In my view, the government needs to change its strategy to one that should have been in place all along: put the interests of consumers and voters first. BC has long suffered under an archaic prohibition-era system that restricts selection to government listed products and which fixes wine prices at exorbitant levels both by imposing absurd levels of taxation and by preventing competition. BC wine consumers and voters really only care about two things: selection and pricing.

Proper reform of the system could provide major benefits on both those fronts but to achieve those goals, two objectives have to be accomplished: 1) the government should restrict its involvement in the liquor business to regulation along with the collection of fair taxation, and 2) the government should replace the current monopoly system with a competitive free market system at the wholesale and retail levels so that consumers and voters will see a meaningful increase in product selection and reduced retail prices. It would not be that difficult to achieve these goals: BC could simply adopt the best elements of the systems now in place in our neighbouring jurisdictions, Alberta and Washington state, both of which have privatized either entirely or almost entirely. In this respect, see my previous article, Two Wine Neighbours – Two Approaches to Liquor Regulation, and this recent op-ed in the Vancouver Sun: Province's Soviet-Style Liquor Monopoly Past Its Sell-By Date.

Unfortunately, at the present time, it is not clear whether the DLP will provide any benefits on selection or pricing, the only two areas that matter to consumers and voters. In this regard, government should probably change the DLP, change its message, or perhaps change both.

- post by Mark Hicken