Bottle shock: Does AG report on NLC's fine wines mean corporation should be privatized?

In the wake of the auditor general's scathing report on the provincial liquor corporation's purchasing of fine wines, a policy analyst and a union leader disagree on whether it should be privatized.

Auditor General Julia Mullaley's report on the Newfoundland and Labrador Liquor Corporation details a lack of transparency when buying and selling wine, as well as concerns over how former CEO Steve Winter bought millions of dollars in wine through his son's company.

Ed Hollett, a policy analyst and political blogger, says the province's retail liquor industry should be privatized.

"It's very easy to make money when you run a monopoly, when you can control everything," said Hollett on CBC's Here & Now, debating privatization with Jerry Earle, president of the Newfoundland and Labrador Association of Private and Public Employees, which represents NLC employees.

"If you look at the conflicts of interest that the NLC has in terms of its relationship with other entities it regulates and so on, it doesn't do anything positive for the public," said Hollett.

"In fact it's a giant drain on the public, and we'd be better off privatizing it."    

The NLC operates 24 large retail outlets across the province, all with unionized staff, and more than 100  Liquor Express outlets, which generally operate in connection with a private business.  

Gary Locke/CBC

Hollett said the current operation has merit, but with privatization the public could see more stores, a wider range of products and lower prices, and the provincial government would still see a cut. 

But Earle disputes Hollett's assessment.

In Alberta, with a privatized liquor sector, Earle said, the public forgoes a significant amount of alcohol revenue.

"Here in the province it's a significant asset," he said. "It benefits health care, it benefits our education, our highways and a number of areas."

Employee benefits

Earle also said privatization would likely shrink the salaries of NLC employees, but Hollett said those salaries are as  high as they because the business is a monopoly in the public sector.

"You cannot tell me that the liquor corporation, the people that are selling liquor, selling wine, selling other spirits, manufacturing it and wholesaling it are an absolutely essential public service that needs to be in the public sector," said Hollett.

"They're just simply not comparable to nurses, and teachers and doctors. It's just nonsense."

Gary Locke/CBC

Earle said there's no justification for privatization right now, since the corporation is profitable and provides revenue — about $170 million last year — to the provincial government, profits that increase every year, he said.

"This is a well-run organization, and what we've seen in the last few days, the auditor general can actually go in and look it," he said.

"If that's a private entity, the auditor general is hands off." 

For now, the debate is moot; Finance Minister Tom Osborne told CBC News this week the province has no intention of privatizing the NLC.    

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