Last week, the Fédération des chambres de commerce du Québec (FCCQ) told Quebec’s ongoing program review committee that the SAQ’s monopoly needs to end. They’re pushing for a slow reform though partial privatization. It’s about time the government listened.
According to a recent Leger poll, 42 per cent of Quebecers would support the privatization of the Société des alcools du Québec. The government has not budged on the issue, purely out of self-interest.
As Quebec’s only buyer and vendor of most alcoholic products, the Crown corporation brings in over a billion dollars to the province annually, about 1 per cent of its revenue. It’s the government’s most profitable venture, with margins over 48 per cent. As a comparison, Liquor Stores N.A. — a company that owns liquor stores in Canada and the U.S. — only had a profit margin of 1.9 per cent.
Consumers are getting ripped off.
But the solution can’t lie is abolishing the whole system. Premier Philippe Couillard and some of his cabinet ministers hinted they might be open to changes, before clarifying that privatization is not on the table right now. While Couillard’s is arguably the most economically responsible government in generations, the practical result of a full privatization would be killing a major cash cow.
If we want action taken to free the liquor market, the discussion should shift from privatization toward ending the government’s monopoly on the sale of alcohol. The FCCQ is doing well to bring this important distinction to the forefront of the debate.
In ending the monopoly, the SAQ would retain its duties as the sole distributor of alcohol in the province. There is a cost advantage of buying alcohol in bulk and the SAQ is one of the world’s largest buyers of wine and alcohol. This could be made to work in favour of consumers and businesses. Privately owned retail outlets would purchase their products from the state at a low cost and sell the alcohol at a price determined by supply and demand.
Once the alcohol is sold, Revenue Quebec would collect its usual sales and sin taxes. The state’s coffers would benefit from an increase in sales due to more alcoholic products being available in dépanneurs, grocery stores and independent liquor retailers. Before Alberta privatized its liquor stores, there were only 208 locations; now there are over 1,300. That means more jobs, more growth and more tax revenue. At the same time, the government would continue to control the flow and distribution of alcohol in the province, ending slippery slope arguments that usually surround full privatization.
Also to its advantage, the state would no longer pay its nearly 8,000 liquor store employees (those at the bottom of the pay scale earn a ridiculous $18 an hour) nor the many bureaucrats working behind the scenes to keep the province wet. That task would be up to private companies, with salaries set according to market value. Only those working in buying, distribution, and warehousing would remain government employees. The province’s cost for leasing stores would also vanish, along with other costs of operating a business.
Consumers would stand to benefit the most. With greater competition and prices regulated by the market, markups would be slashed and prices would not be kept artificially high.
As in Alberta, ending the SAQ’s monopoly may one day lead to a full privatization. But before getting ahead of ourselves, we need to push for small steps toward liberalization, and that starts by giving the private sector a greater role while keeping the government in the picture.
The above proposal would benefit businesses, consumers, and may actually increase the government’s revenue by reducing expenditures and increasing sales. What better government to understand and implement these changes than the current one?
Original article HERE