No better time than summertime to privatize alcohol sales in New Brunswick

With summer in full swing, many New Brunswickers are visiting their nearest Alcohol NB (ANBL) to stock up on beverages of choice. Unfortunately, consumers in the province continue to have less choice and pay higher prices because alcohol sales remain largely a government-controlled monopoly.

ANBL is solely responsible for the purchase, importation and distribution of alcohol in the province. It also governs retail through a mix of government and private stores. Simply put, there’s no reason for government to be in this business. It’s time for the Higgs government to privatize ANBL.

The case against a government monopoly on alcohol sales is rather straight forward. Monopolies generally drive prices up by restricting competition. They also restrict choice both in terms of the number of stores and product availability, as such decisions are made by a centralized bureaucracy rather than individual store owners responding to customer preferences.

Consider the experience of Alberta, which privatized the retail portion of liquor sales in the early 1990s. Research has shown that post-privatization, consumers benefited from increased competition with more stores, falling prices and greater product selection.

Outside of Alberta, varying degrees of privatization exist across the country. Beginning in 2014, New Brunswick has taken some steps in this direction by allowing the sale of cider, wine and beer in certain grocery stores. However, ANBL still exercises strict control over the industry—in addition to control over the supply of alcohol, the agency owns 42 stores and strictly regulates the operation of agency stores and sales in grocery stores.

Naturally, further privatization would provoke opposition from government-sector unions including CUPE and the NUPGE who’ve claimed that privatisation would be “bad news for New Brunswick” and would lead to health and social consequences.

This is nonsense. While it’s not surprising these unions would try to protect their own self-interest, research has shown “no evidence that the residents of Alberta have been exposed to increases in crime or liquor-related offenses as a direct result of privatization.” Further, alcohol is privatized in much of the United States without any apparent calamitous outcomes.

ANBL’s profits, which were a reported $202.3 million last year, are generally remitted to the province to support the provincial budget. Critics will also raise concerns over the loss of this provincial revenue. However, according to the research, the Alberta government did not experience a loss of revenue from privatization and actually received more revenue through increased sales (and additional corporate income taxes from the new private-sector stores). In any event, the annual profits represent a small fraction of the provincial budget (less than two per cent).

Not surprisingly, privatization is on the agenda across the country. In Ontario, full privatization has become a front-burner issue during an ongoing strike at the Liquor Control Board of Ontario (LCBO). Closer to home, a prominent report commissioned by the government of Newfoundland and Labrador recommended privatization in that province as well.

Again, there’s simply no reason for government to be in the business of retailing alcohol. With a relatively large government sector in the province, privatization could start a welcome shift toward government focusing on its core functions and leaving business to businesses. To unlock greater choice and lower prices for consumers, the Higgs government should finally fully privatize ANBL.