Monday, May 28, 2012

#LiquorLeaks Privatization Primer

A pause to refresh and compile a list of links to media coverage and news releases about the controversial move by the British Columbia government to privatize the Liquor Distribution Branch's warehousing and distribution. 

Finance Minister Kevin Falcon revealed the plan in the Feb. 21 budget. Rich Coleman, whose portfolio includes gambling and liquor, launched a negotiated request for proposals on April 30. Deadline for bids is June 29 and a shortlist, that could be as small as one company, is expected July 20. 

Full coverage in Business in Vancouver

NDP blasts liquor privatization process

The Tyee: Exel's long march to control B.C.'s liquor distribution 


Reveals Exel's expansion strategy

Reveals Exel's contract terms 

Glacier newspapers' Keith Baldrey: Liquor sale smells fishy 

Shaw TV's Sean Leslie: This Week in B.C. 

Global TV's Marisa Thomas: Are liquor prices set to get higher? 

B.C. Craft Brewers Association news release -- B.C. Craft Brewers Guild opposes privatization of B.C. Liquor warehouse  

Canadian Restaurant and Foodservices Association news release -- CRFA applauds intention to privatize Liquor Distribution Branch  

Note: CFRA cites the 2005 Ontario government's Lacey Report and a Montreal think-tank's 2005 report, both recommending an increased private role in the liquor industry. Neither, however, offer in-depth analysis of the supply chain and its costs. The B.C. government did no such study before embarking on the distribution and warehousing privatization.

Note: In 2007, the Alberta government was reeling from 2006 supply chain chaos at Connect Logistics, the Exel-owned company that became the private monopoly in 1994. The labour shortage and management of the warehousing and trucking created a perfect storm of trouble for the industry. 

PricewaterhouseCoopers report for Alberta Gaming and Liquor Commission: Liquor Warehousing and Distribution in Alberta Supply Chain Analysis

CFRA's key comments are on page 23: 
"AGLC and CLS (Connect Logistics Services) must do a better job forecasting demand and planning for spikes in volume. There must be performance incentives in CLS' contract to ensure service levels are maintained and delivery times are guaranteed during busy peak times. Given the monopoly CLS enjoys there is no risk of losing market share due to poor service. Why would CLS increase their costs by providing more staff to ensure service levels are maintained when there is no risk of losing customers? In the absense of competition AGLC must ensure CLS maintains service and delivery standards without passing on additional service costs to retailers and licensees."


All evidence so far shows that the privatization tender in B.C. is driven by one company, Exel, and its B.C. Liberal-connected lobbyists. There are serious questions about the integrity of the bidding process, but my repeated requests to interview Minister Rich Coleman have been denied. 

Did the government learn any lessons from the tainted BC Rail sale? This is a process governed by a hard deadline of March 1, 2013. The next scheduled election is May 14, 2013. The cash-strapped government desperate to hold onto power is hungry to cut costs and increase revenue by any means necessary. 

There is no business plan or cost/benefit analysis and the government does not want to show you or me what's hidden in the cabinet documents. If the idea to privatize liquor logistics is solid, if there is data to back it up and if it will benefit the province, why does the government refuse to show us proof? 

The sale of alcohol is a major revenue generator and contributor to our economy and I'm among many proud supporters of B.C. wines and microbrews. LDB poured $890.4 million of profits into provincial coffers in 2010-2011. Some of those dollars helped fund the operation of schools and hospitals. The government wants more, so it's opening up a new sales channel via movie theatres. Cineplex hired lobbyist and Liberal insider Marko Dekovic to arrange a meeting with liquor minister Rich Coleman.

In the rush to wring more revenue out of the taps, is the government neglecting the social side of the equation? Alcohol is a legalized drug that is addictive. Visit any Provincial courthouse on any weekday and you will be shocked at how frequent the misuse or abuse of alcohol is in the foreground or background of trials. You will see sad, broken people from disintegrated families. They are the opposite of the smiling, young people having fun in beer ads. Maybe you know someone who has battled alcoholism?

The Centre for Addictions Research of B.C. study called Alcohol Pricing and Public Health in Canada: Issues and Opportunities is worth a read. The pricing and taxation of booze, it says, "is arguably the single most important issue to tackle when addressing alcohol misuse from a public health perspective. It is also the hardest to engage because of the multitude of interests involved." Among its many recommendations are tying alcohol taxes and markups to the rate of inflation and simplifying alcohol volume and strength-based taxation to encourage the consumption of lower-alcohol drinks. 

1 comment:

krank! said...

Thanx for holding the govt's feet to the fire. Your colleagues inthe MSM in particular Vaughn and Keith should acknowledge your role for the heavy lifting you've done on the Exel story.
C'mon people, make a comment to his blog!

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