No better time than summertime to privatize alcohol sales in P.E.I.

With summer in full swing, many Islanders are heading to their nearest Prince Edward Island Liquor Control Commission (PEILCC) store to stock up on beverages of choice for their cottage, patio or neighbourhood barbeque. Unfortunately, consumers in the province continue to have less choice and pay higher prices because the supply and retail of alcohol in the province remains a strictly-controlled monopoly.

Clearly, it’s time for the King government to privatize the PEILCC. 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 because a centralized bureaucracy—not individual storeowners responding to customer preferences—makes these decisions.

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 liquor prices and greater product selection. Outside of Alberta, varying degrees of privatization exist across the country. At least five other provinces currently have some form of private retail.

This stands in contrast to P.E.I.’s regime, which is among the most restrictive in Canada. The PEILCC currently operates 18 retail stores and an additional 12 agency stores. Unlike many Canadian provinces, in P.E.I. there’s virtually no private sale of alcohol permitted outside what is strictly controlled by the commission.

Naturally, privatizing would provoke opposition from government-sector unions. The Union of Public Sector Employees (UPSE) has consistently opposed any degree of privatization in the system, even the shift to agency stores, which aren’t truly private. While the union’s position may be predictable given that the PEILCC is a reliable source of union jobs (and dues), research does not support union claims that privatization is a public health risk. In fact, a study on the experience found “no evidence that the residents of Alberta have been exposed to increases in crime or liquor-related offenses as a direct result of privatization.”

Critics of privatization also point to the annual dividend supplied by the PEILCC to the provincial government. In 2022 (the latest year of available data), the PEILCC reported a transfer of profits to the provincial government totalling $49.7 million. However, according to 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 PEILCC’s annual profits represent a small fraction of the provincial budget (less than two per cent).

Not surpassingly, privatization is on the agenda across the country. In Ontario, full privatization has become in light of a 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. New Brunswick shifted toward allowing beer to be sold in grocery stores in 2019. Even Nova Scotia, which has a highly restrictive regime, has some level of private alcohol retail. The experience in both of these Maritime provinces has largely been one of better hours, greater selection and competitive pricing.

Finally, there’s simply no reason for government to be in the alcohol business. In P.E.I., which is dominated by a large and growing government sector, 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, and to help tame a bloated government sector, the King government should privatize the PEILCC.