ONE of the more puzzling, if not downright suspicious, moves by the B.C. Liberal government is its out-theblue insistence on privatizing the Liquor Distribution Branch.
It has led to speculation that other major changes to the province's liquor policies are on the way - potentially paving the way for raising the price of booze and perhaps closing some government liquor stores as well.
Whenever a government appears to be in its dying days and its politicians start tinkering with liquor policies, my political antennae starts quivering. Mixing politics and liquor can be a potent recipe for disaster (remember the Knight St. pub scandal?)
The government has yet to provide any business case for privatizing the LDB. The NDP's critic, Shane Simpson, has asked repeatedly in the legislature for any details supporting the sale, but has been rebuffed by the minister responsible, Rich Coleman, at every turn.
The privatization scheme appears rushed, without much thought given to the ramifications. Coleman has admitted the decision to sell the branch was only made a week before the February budget was tabled.
The original sell-off date was sometime in 2015, but that has suddenly been moved up to March, 2013 (just before the scheduled provincial election).
Last week, the branch's general manager told industry reps there is no time for consultation because of the "tight timelines" involved. Why the urgency? The government won't say.
I've talked to private industry representatives, who fear their distribution costs will increase if a private company begins running things instead of the government. Naturally, those increased costs will be passed on to consumers.
The industry looks at what's going on in Alberta when it comes to liquor policies, and shudders. A prominent brewer in this province - Matt Phillips, founder of Phillips Brewing Co. - says he pays almost twice as high a distribution cost for a case of beer in Alberta compared to his cost in B.C. ($1.53 versus just 78 cents in B.C.).
Further clouding the issue is the public impression that one particular company may be the front-runner in the bidding process for the LDB. The company, Exel Logistics, employs two prominent B.C. Liberal insiders as its lobbyists.
One of those lobbyists, Patrick Kinsella, is a former campaign chair for the B.C. Liberal party and was a key adviser on Premier Christy Clark's leadership campaign. A leaked 2009 internal corporate memo from Exel (obtained by Business in Vancouver) shows the company thinks it could "influence the writing of the request for proposal" in the bidding process by using its "strong relationship" with Coleman.
Coleman has heatedly denied any favouritism in the bidding process but, as they in politics, the "optics" here are brutal. If the B.C. Liberals had detected the same situation occurring under the NDP government of the 1990s, they would have gone ballistic.
Of further concern is the fact that Exel also operates the distribution system in Alberta. Industry representatives in this province characterize Alberta's system as a chaotic mess that is driving up prices.
The bidding process also proposes that government liquor stores have stand-alone profit and loss reporting, instead of the current collective reporting. Since some stores are considerably more profitable than others, this could potentially lead to the closure of some stores and the opening of more private stores (which, of course, pay their employees less than what can be earned in government stores).
There are rumors in the industry that other changes are coming as well. The old issue of "dual licences" has resurfaced (this would allow pretty well any restaurant to turn into a bar at, say, 9 p.m.) and with it comes worries about a proliferation of liquor outlets, which not only greatly expands the availability of alcohol, but also makes sustaining a decent business in that industry that much more difficult.
Add it all up, and you have an industry that affects a huge number of British Columbians potentially getting hammered by major changes - and all with no consultation or explanation forthcoming.
Throw in the presence of two key Liberal insiders involved in a potential multimillion dollar deal with huge political ramifications, and alarm bells start to go off.
The NDP's Simpson says he smells a rat here. He may well be right.
Keep a close eye on this one, folks. Things may get ugly before it's all over.
Keith Baldrey is chief political reporter for Global B.C.
