Submission to the Liquor Policy Review

Transcription

1 Submission to the Liquor Policy Review September 19, 2013 Submitted by: B.C. Government and Service Employees Union 4911 Canada Way, Burnaby, BC V5G 3W3 Tel (604) CEP 467 cope 378 Page 1

2 Introduction The B.C. Government and Service Employees' Union (the "BCGEU") represents approximately 65,000 people working in various sectors and occupations in more than 550 bargaining units across British Columbia. Our diverse membership includes approximately 3,800 employees of the Liquor Distribution Branch (LDB). These members work in 195 BC Liquor Stores across the province, as well as two wholesale customer centres in Vancouver and Victoria, two distribution centres in Kamloops and Vancouver, and the LDB's head office in Vancouver. The BCGEU also represents workers who administer liquor licenses, conduct inspections, and develop liquor policy in the Ministry of Justice's Liquor Control and Licensing Branch (LCLB). Every day thousands of our members are directly engaged in the management, distribution and sale of liquor in BC. In addition, our broader membership provides a wide array of public services that respond to the health, safety and social impacts of alcohol use. Accordingly, we appreciate the opportunity to provide this submission to the provincial liquor policy review (the Review). The terms of reference for the Review cover all aspects of liquor policy including licensing, control and LDB distribution. Our submission touches on all of these areas. The provincial government has indicated that B.C.'s liquor laws are outdated, inefficient and need to be modernised. The importance of revenue to government and the protection of public health and safety have also been acknowledged as guiding principles for this review. We agree that liquor policy can be updated and improved through sensible policy decisions that are evidence- based and focused on protecting the public interest. Page 2

3 Executive Summary Fair, effective liquor policy maintains a delicate balance between meeting the needs of consumers and protecting public health and safety. B.C.'s Liquor Distribution Branch is well positioned to achieve this balance, and to continue generating significant revenue for the provincial government. In addition, it is critical that our licensing authorities are provided with the tools and resources they need to effectively administer and enforce modernized liquor laws. The implementation of the following recommendations would represent positive steps toward modernizing B.C.'s liquor laws: 1. Take advantage of the strengths of the LDB and maintain or enhance public control of the management, distribution and sale of alcohol. There is good evidence that a publicly managed system of liquor distribution and sales is the best model for balancing the needs of consumers with public health and safety objectives. We recommend: The LDB remain as the sole agency tasked with importing and distributing alcoholic beverages in B.C., and operating the BC Liquor Stores retail chain. The current moratorium on private liquor store licenses continue. 2. Make an explicit commitment to social responsibility in any new liquor legislation. BCGEU members are committed to building a healthy and safe province. As such, we recommend the government consider including an overarching commitment to social responsibility in any new legislation. 3. Protect the public interest with simplified, modern regulations. The BCGEU supports the modernization of liquor regulations, and recognizes that some aspects of liquor licensing could be simplified. However, various forms of self- regulation like voluntary codes of conduct or delegated regulatory powers are not adequate to effectively protect the public interest. 4. Backlogs are Bad for Business: Provide Resources for Monitoring and Enforcement: Ensure the LCLB is adequately funded and staffed in order to carry out effective oversight and provide timely services for both businesses and the public. 5. Provide greater operational flexibility for the LDB: Within the context of its mandate to promote safe and responsible consumption of alcohol, the LDB should be allowed the operational flexibility to implement measures that enhance consumer convenience, support local producers, and increase revenue to the provincial government. These measures could include longer hours, Sunday openings, refrigeration and opening new stores. It is important to acknowledge the clear benefits of the current LDB model. In addition, we have identified a number of strategies to improve the operations of the LDB, and meet the aims of the Review, including generating more revenue for the province. Beyond this, any changes to liquor regulations must balance the needs of business and consumers with public health and safety in short, protect the public interest. And, the government must provide the LCLB with adequate resources to provide effective public oversight of liquor in B.C.. Overall, we recommend maintaining and building on the current system, which protects the health safety of British Columbians while meeting consumers' needs. Page 3

4 Background In the past decade, important changes have already been made to liquor policy in B.C.. Most significantly, the province partially privatized the retail sales of alcohol beginning in More recently, a number of updates to B.C.'s liquor laws have been made in response to requests from the business community and consumers. For instance, rules were changed to allow theatres to serve liquor, and brewers and distillers can now have on- site lounges or tasting rooms. Overall, the recent changes to licensing and distribution have loosened restrictions on where and when alcohol can be served and enhanced the ability of some local producers to sell directly to consumers. So far, the most visible result of these changes has been a proliferation of private stores. Currently, there are 670 private liquor stores in BC, 195 government liquor stores, 221 rural agency stores, 279 on- site manufacturer stores, 35 off- site manufacturer stores, 12 private wine stores, and 11 duty free stores 1. Taking into account bars and restaurants, there are now about 10,000 licensed premises in B.C. 2. As alcohol has become more available in the past 10 years, consumption has increased. The LDB Works We agree that aspects of B.C.'s liquor policy should be modernized. In contemplating changes, however, it should be recognized that B.C.'s publicly owned liquor distribution and retail sales system (the LDB) offers clear benefits that are worth maintaining and building upon. The key advantages of this model align closely with the guiding principles established for this Review. Maintaining or Increasing Revenue to Government B.C.'s Liquor Distribution Branch consistently provides nearly $1 billion in much needed revenue for the government. In 2012/13, the LDB contributed $930 million to the province's treasury 3. This income funds public services for British Columbians, and offsets the cost to taxpayers of alcohol- related harms. Evidence from Western Canada demonstrates that keeping liquor distribution and retailing in public hands (as is the case partially in B.C. and completely in Saskatchewan) maintains or increases government revenue from alcohol sales. In contrast, Alberta's approach of complete privatization has resulted in declining government revenue both on a per capita and per litre sold basis since the implementation of the policy in Certainly, there is potential for the LDB to generate additional revenue beyond current levels. In his review of government operations in Ontario, Don Drummond, former Chief Economist with the TD Bank, rejected the sell- off of the public Liquor Control Board of Ontario. Instead he called for the opening of additional public liquor stores and the full utilization of the LCBO s purchasing power to improve profits and create additional government revenue. The same approach could be taken in B.C.. 1 BC LDB, "BC Liquor Distribution Branch 2012/13 Annual Report", p.5, report. 2 BC LCLB, "LCLB Licensing and Enforcement Statistics ", forms/branch- stats pdf. 3 BC Liquor Distribution Branch 2012/13 Annual Report. 4 The Economic and Social Consequences of Liquor Privatization in Western Canada, David Campanella and Greg Flanagan, CCPA/ Parkland Institute, 2012, p Page 4

5 Minimize Health and Social Harms Caused by Liquor A publicly managed distribution and retail system allows public health to be prioritized more easily. It provides government with readily accessible policy levers that have been demonstrated to effectively reduce the negative health and public safety effects of alcohol use, like managing outlet density, hours of operation, pricing, product availability and putting limits on certain types of promotions 5. In a privatized environment, these tools are less available and much more difficult to employ. BC Liquor Stores are consistently better at refusing to sell alcohol to minors. The most recent report from the LCLB showed that staff at BC Liquor Stores checked ID and did not sell to a minor 92% of the time. In contrast, the compliance rate at private liquor stores was just 72% 6. In addition, our public BC Liquor Stores have extensive social responsibility programs. The Branch's responsible use awareness programs are refreshed every month. In addition, the LDB has supported Dry Grad for over a decade 7. Balance Economic and Social Interests There are a number of points to be made about how the current model of government ownership is the best option to foster a satisfactory balance between the economic and social interests of B.C. communities. First, it has already been noted that the LDB sells liquor in a socially responsible way, and its performance in this realm is better than private stores. As well, income from the LDB funds public services for B.C. communities to the tune of almost $1 billion each year. Not only does the LDB generate revenue for public services, it delivers lower prices and a better selection of products compared to private stores 8. At the same time, the LDB creates good jobs in communities across the province. Public stores and B.C.'s liquor distribution centres are staffed by professional employees that earn a living wage with good benefits. These are the kinds of jobs that allow families and communities to flourish, rather than just scrape by. Unlike in public stores, employees in B.C.'s private liquor stores are routinely paid the minimum wage with no benefits, and in jurisdictions that have chosen privatization, average wages and benefits for liquor store workers were reduced considerably 9. 5 Tim Stockwell, Jinhui Zhao, Scott Macdonald, Kate Vallance, Paul Gruenewald,William Ponicki, Harold Holder & Andrew Treno,"Impact on alcohol- related mortality of a rapid rise in the density of private liquor outlets in British Columbia: a local area multi- level analysis," Addiction, 106, no. 4 (2011), 6 Liquor Control and Licensing Branch, Minors as Agents Program, 2012/13 Annual Report, forms/annualreport- MinorsAsAgents pdf. 7 BC Liquor Distribution Branch 2012/13 Annual Report. 8 A number of surveys have demonstrated that prices are generally lower and selection is better at public stores compared to private stores in B.C.. For example, Consumers' Association of Canada (BC) "British Columbia's Liquor Distribution System- Does it Work for Consumers?" 2006, ; BCGEU," Victoria private liquor stores charge as much as 35 per cent more, price survey finds" May 4, 2009, 9 David Campanella and Greg Flanagan, "The Social and Economic Consequences of Liquor Privatization in Western Canada", Saskatchewan CCPA & Parkland Institute, 2012, judgement Page 5

6 The LDB is also a strong supporter of B.C. producers of wine, beer and spirits. B.C. wines are featured prominently in BC Liquor Stores, product specialists have particular expertise regarding BC wines, and there are also promotional opportunities for BC wines several times a year (e.g. annual Best of BC feature). A lower rate of markup is applied to small breweries, the majority of which are B.C.- based, and direct sales of 100% B.C. content wines and distilled spirits are exempted from LDB markups. As such, effective LDB policies are in place to support small businesses in the agri- food sector, and government liquor stores provide a place where local products can be showcased and promoted. In contrast, there is evidence that liquor privatization does not benefit small businesses or consumers in the long run. Over time in privatized Alberta (despite policies to discourage the trend) the market for alcohol sales is increasingly being dominated by a few large chain stores, while small independent stores are finding it harder and harder to compete. At the same time, it does not appear that consumers are reaping much benefit, as prices for alcohol in Alberta are comparable or higher than in B.C.'s public stores 10. In Washington state where sales of alcohol were privatized last year, prices increased by seven percent, and small local businesses similarly find themselves struggling to compete with large national retail chains 11. Be evidence- based and transparent The public model provides enhanced transparency and accountability to the public. The LDB is guided by an annual service plan and provides details about its business publicly. As a government business enterprise, the mandate and policies of the LDB are open to public scrutiny in a way that the activities of private retailers are not 12. Loosening the Reins: Allowing Operational Flexibility for the LDB The preceding section outlined the advantages of the LDB for British Columbians. Certainly, the agency already serves the public well. However, we have identified some improvements that could enhance the performance of the LDB and allow it to better meet the needs and expectations of consumers. Currently, BC Liquor Stores operate under a number of restrictions. For most stores, the hours of operation are limited, and have been reduced even further in recent years. The vast majority of stores are closed on Sundays. Only a handful of stores offer refrigeration, and just liquor- related products can be sold in BC Liquor Stores. The LDB has relocated and renovated a number of its stores, but there has not been an increase in the total number of public stores in over a decade. Most recently, the public store in Esquimalt was closed. Removing operational barriers would allow LDB stores to provide the same level of service and convenience that is currently available at private retailers, including longer hours, Sunday openings and 10 David Campanella and Greg Flanagan, "The Social and Economic Consequences of Liquor Privatization in Western Canada"; Kristin Annable & Bill Mah "Liquor Privatization: Did Albertans get what was promised?" Calgary Herald, August 25 th, 2013, 11 Oregon Public Broadcasting, "Liquor Privatization In Washington State, One Year Later", May 30, 2013, liquor- privatization- in- washington- state- one- year- later/; Associated Press, "Privatizing liquor sales in Washington hasn't brought price down," December 31, 2012, northwest- news/index.ssf/2012/12/privatizing_liquor_sales_in_wa.html. 12 This point about government monopolies was made by David Campanella and Greg Flanagan in their report The Social and Economic Consequences of Liquor Privatization in Western Canada, p Page 6

7 refrigeration. The LDB should also be afforded the freedom to seek out and secure locations for new stores. Certainly, replacing the recently closed Esquimalt store and establishing a store in downtown Victoria should be priorities for the LDB. Opening small "express" stores in convenient locations is a model that could be explored. Manitoba's government liquor retailer is already experimenting with this approach 13. In addition to providing greater convenience for shoppers, these changes would bring in additional revenue for the provincial government. The BCGEU estimates that an additional $85 to $100 million could be generated each year. And, according to a recent BCGEU poll, there is strong public support for these expanded services in public liquor stores 14. Other options could also be pursued to increase revenue and meet other policy objectives at the same time. For instance, allowing the sale of a wider range of products in public liquor stores has the potential to provide opportunities for local businesses. Certainly, a balanced, creative approach is needed, given the LDB's obligation to distribute and sell alcohol in a socially responsible way. But allowing flexibility so that the LDB can be a more effective, innovative retailer is long overdue. Modernizing and Simplifying Regulations The BCGEU acknowledges that some aspects of BC's liquor laws could be updated. Specifically, the government has indicated that it will consider issues like the sale of wine at farmers' markets, allowing minors in pubs during the daytime, and licensing establishments like spas. We support the modernisation of regulations as long as the public interest is adequately protected. As many commentators have noted, alcohol is 'no ordinary commodity', and therefore thoughtful, proactive regulation is needed. Certainly, various forms of self- regulation like voluntary codes of conduct or delegated regulatory powers are not adequate in this case to effectively protect the public interest. Inspection and Licencing: Backlogs are Bad for Business The Liquor Control and Licensing Branch licences businesses that make and sell liquor and ensures that they comply with provincial liquor laws. The Branch reports approximately 10,000 licensed establishments in B.C., monitored by 50 compliance and enforcement staff. However, current records indicate that only 33 of these positions are currently staffed 15. This reduction in staffing has occurred at the same time provincial expectations for the Branch have increased considerably. The introduction of the Minors as Agents Program is a prime example. As well, the recent addition of catering licenses, charity wine auctions, on- site lounges for breweries and distilleries, and changes to tied house rules have put even more pressure on the Branch. The combination of increasing workloads and reduced staffing in the Branch is creating a backlog in licensing applications. This is bad for business and the economy. There is not enough staff or funding to provide 13 MLCC, "Manitoba Liquor Control Commission Annual Report 2012/13," 14 BCGEU, "Poll: British Columbians support Sunday openings, expanded hours, new public liquor stores," July 31 st, 2012, 15 BC LCLB, "LCLB Licensing and Enforcement Statistics ", forms/branch- stats pdf. Page 7

8 adequate public safety oversight or timely service to businesses and the public. In addition, because these inspector positions are not filled, current members are being shifted between regions on travel status to cover emergent issues. This only serves to increase costs. It should be noted that inspections also serve to provide revenues through penalties imposed for violations. In the last quarterly report April 1/13 to June 30/13, the Branch quantified the revenue from fines at $245,000 from 3,279 inspections. A reasonable argument can be made that inspections both protect public safety and generate provincial revenues. Finally, a robust inspection program ensures a level playing field for all licensees. Conclusion It is important to acknowledge the clear benefits of the current LDB model. We have identified a number of strategies to improve the operations of the LDB, and meet the aims of the Review, including generating more revenue for the province. Beyond this, any changes to liquor regulations must balance the needs of business and consumers with public health and safety- in short, protect the public interest. And, the government must provide the LCLB with adequate resources to provide effective oversight. Overall, we recommend maintaining and building on the current system, which protects the health safety of British Columbians while meeting consumers' needs. Page 8