Welcome to the Liquor Control Board of Ontario (LCBO) In Canada the sale of alcoholic beverages is within the provincial

jurisdiction, and it is done through liquor control authorities. In recent years politicians in and out of government in several provinces, including Ontario, have made stat ements advocating the privatization of the sale and distribution of all alcoholi c beverages. In September 1993, Alberta became the first province to begin priva tizing its liquor control board. Basically, privatization means change of owners hip which by itself, some would argue, is of limited importance.

The objective of privatization is normally to achieve economic efficiency and co mmercial profitability. The basic economic argument is that crown corporations c annot utilize resources at minimum cost because they tend to become bureaucratic , confused and inefficient. But privatization may also be advocated and implemen ted for purely political and ideological reasons such as the control of public e xpenditures, limiting the role of government in managing the economy ( roll back the frontiers of the state ), redistributing wealth ( property owning democracy ), and w g trade unions. It is, however, widely acknowledged that the privatization of provincial liquor control boards raises many policy issues and concerns both economic and social. This report attempts to address some of these issues and concerns which might ar ise if the Liquor Control Board of Ontario (LCBO) were privatized. We shall examine the impact of privatization on alcohol prices, consumer choice and service, provincial revenues and smuggling, alcohol abuse, the Ontario wine industry, unemployment, and related issues and concerns. The report begins with Section 2 containing background material on the alcohol b everage industry and the LCBO. Theoretical considerations for and against privat ization are discussed in the context of the LCBO case in Section 3. The body of the report is organized around four major issues.

First, the impact of LCBO privatization on consumers in terms of prices, choice and service. These are discussed in Sections 4, 5, and 6. Second, revenue implic ations in terms of profits and taxes generated by the LCBO, falling sales, and t he illegal alcohol market in Ontario. These are discussed in Sections 7, 8, and 9. Third, in Sections 10, 11 and 12 we discuss the LCBO social responsibility policy, the restricted availability of a lcohol, and the cost of alcohol abuse. Fourth, LCBO pricing policy, implications for the Ontario wine and grape industr y, and for unemployment in the province are discussed in Sections 13, 14, and 15 . Section 16 provides an overview of the consequences of the Alberta experiment. Summary and conclusions are contained in Section 17.