Nova Scotia government should finally privatize alcohol sales

Due to new provincial rules, which recently went into effect, convenience stores in Ontario are now allowed to sell beer, wine, and other alcoholic beverages. And beginning on Halloween, grocery stores in the province will be able to sell alcohol.

Ontario is just the latest province to loosen regulations around alcohol sales. Closer to home, New Brunswick implemented beer sales in liquor stores in 2019, while a report commissioned by the government of Newfoundland and Labrador recommended privatization.

Unfortunately, consumers in Nova Scotia 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 Houston government to privatize the Nova Scotia Liquor Corporation (NSLC). The case against a government monopoly on alcohol sales is rather straightforward. Monopolies generally drive prices up by restricting competition. And they 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 storeowners 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 in that province benefited from increased competition with more stores, falling liquor prices and greater product selection.

Outside Alberta, varying degrees of privatization exist across the country. At least five other provinces currently have some form of private retail, which stands in stark contrast to Nova Scotia’s tightly-controlled regime. The NSLC currently operates 108 retail stores and an additional 65 agency stores, and has allowed just four private stores to open in 2002 (all in the HRM) and has not increased the number since.

Consumers in Nova Scotia would surely benefit from privatization. So who’s against it?

The president of the Nova Scotia Government and General Employees Union (NSGEU) has claimed that privatization of the NSLC would lead to a “slew of social issues.” But alcohol is privatized in many other jurisdictions including in Canada and the United States. And 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.”

Critics of privatization will also point to the annual dividend supplied by the NSLC to the provincial government (last year, the NSLC reported record profits of $284.7 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 business income taxes from the new private-sector stores). In any event, the annual profits represent a small fraction of Nova Scotia’s budget (less than two per cent).

Finally, there’s simply no reason for government to be in the business of retailing alcohol. In a province dominated by a large and growing government sector, privatization of the NSLC could start a welcome shift toward government focusing on core functions and leaving business to businesses. To unlock greater choice and lower prices for consumers, the Houston government should finally privatize the NSLC.