Privatizing government-run liquor stores in Sask. would cost taxpayers: study

Privatizing liquor stores costly: study A new study suggests Saskatchewan’s plan to privatize half of its government-owned liquor stores would be a drain on revenues.

A new study suggests Saskatchewan’s plan to privatize half of its government-owned liquor stores would be a drain on revenues.

The report by the Canadian Centre for Policy Alternatives found that the proposed changes, which include a 25 per cent reduction to liquor mark-ups, would cost taxpayers $115 million over the next five years.

The left-leaning think-tank says wholesale costs would rise because adding private retailers and removing public stores would create a more fragmented, complex and costly distribution system.

“The winners will be those individuals and corporations that take over exceptionally lucrative liquor stores, which virtually guarantee major returns year after year,” the report said.

“The losers will be the rest of the Saskatchewan public, who are set to lose out on $115 million in funding over the next five years.”

The province plans to sell off 40 government-owned liquor stores it says are less profitable and more costly to operate. If all goes ahead as planned, the number of privately owned liquor stores would increase from four to 56. The remaining 35 stores would still be operated by the Saskatchewan Liquor and Gaming Authority.

However, the report notes that liquor sales at those 40 publicly owned stores totalled nearly $80 million last fiscal year, and sales increased 12 per cent compared to 2011. It found operating costs as a percentage of sales averaged 14 per cent, which is lower than the 16 per cent discount the government currently pays private retailers to operate.

“There is no indication that the operating costs at these stores are unmanageable,” the report said.

The report says the government could achieve its goal of a renewed focus on customer service and convenience at liquor stores by making necessary investments. It suggests replacing franchise shops with full-line government-run stores to improve selection in rural areas, and opening smaller publicly owned stores near or within existing retail centres for more convenience.

Don McMorris, minister responsible for the SLGA, says the information in the report is wrong.

With files from The Canadian Press