Sunday, May 03, 2009

Beer and elections: Creating sorrows to drown

The campaign hoohaw about the price of beer should make you despair.
Private liquor stores are miffed at the NDP plan to roll back price breaks the Liberals have handed them in the last few years.
The bigger discounts cost taxpayers and enriched the well-connected private companies, who convinced the Liberals their profits weren't high enough. (You might try that - ask the store if it will cut prices for you because times a little tough.)
You can debate the largesse as a policy measure, but it's small potatoes in terms of election issues, unless you own a private liquor store.
Here's a primer. When the Liberals decided to allow private liquor stores in 2002, they said the operators could buy their stock at 10 per cent below the retail price in the province's liquor stores.
If a six-pack of beer sold for $10 in the government store, the private operator could buy it for $9 and mark it up to cover operating costs and leave a profit.
But the Liberals messed up the whole privatization effort. They told private operators the public stores would be closing.
Then - a little late, really - the government looked at the numbers. Closing the public stores would mean a big drop in government revenues, and thus higher taxes. There was no public advantage, just a big cost.
So the government reneged. That wasn't fair to the private operators, changing the rules after they had invested.
So to sweeten the deal, the government gave them a bigger discount - 12 per cent. For a store doing $2 million in sales, that meant an extra $40,000 a year in profits.
Not enough, said the stores. They kept lobbying and the next year got the discount raised to 13 per cent.
And, naturally enough, they kept lobbying - insider Patrick Kinsella was involved with one of the largest companies - and in 2007 John Les quietly gave the private stores another windfall. The discount jumped to 16 per cent.
There was no public benefit. Quite the opposite - every time the government increased the price break for private stores, it reduced its own revenues. And that means taxes had to go up.
And there was no economic case for the change. Stores weren't closing. In fact, in the year before the last gift, the number of private stores increased by 10 per cent and the leading company said it planned more expansion.
The government just offered a series of gifts to the private companies, at your expense. The discounts will mean more than $50 million a year transferred from government to a select group of private businesses.
The NDP, looking for revenue to support spending increases, said in its platform it would rescind the changes and take the discounts back to their original, 10-per-cent level. That would produce $155 million over three years, the party says.
Horrors, says the industry. The change would mean the companies would pay an extra 80 cents wholesale for a six pack of beer, which they would pass on to their customers. People seeking convenience would pay; the frugal would likely go to a government store.
The industry's bigger concern is the NDP plank to raise the minimum wage from $8 to $10. Most jobs in the private liquor business are minimum wage; the industry believes having to pay staff $10 an hour would add 15 to 20 per cent to its operating costs.
Wiping out the whole discount is probably unfair. The initial increase, in 2003, was reasonable compensation for the way the Liberals changed the rules of the game after some private companies had entered the industry.
But the following two price breaks were simply gifts from the government to a group of well-connected private companies (and political donors). At taxpayers' expense.
Footnote: Private liquor store expansion has increased the number of alcohol outlets from 786 in 2002 to 1,294 in 2008. A report last year from the province's chief health officer noted that the expansion of private outlets had identified as a factor in increasing addiction and problem and youth drinking.

16 comments:

Gazetteer said...

Sure Paul...by all means let's get back to the real issues...

Right after the following recap of your excellent analysis:

#1 Make costly promises you can't keep, even to your friends.

#2 Bring in someone to help 'fix' things by opening the door to never-ending sweetheart deals that cost the public dearly, all in an effort to make things good with your friends again after the fact.

#3 Subsequently use your own fixer's sweetheart deals to generate bogus election issues that just might put your back over the top.

_____

So what are the real issues here, especially given that you could do this type of analysis with a whole raft of other group/policy/privatization issues that have been 'fixed' by this government?

Well, to my mind - the real issues in this story are a clear demonstration of:

A) Mis-management of the public purse, and

B) Poor stewardship of the public interest.

And are not the combined abilities of managing the public purse effectively and acting as a good steward of the public interest the very things that Mr. Campbell would most like us to believe are his strongest suits as election day approaches?

Therefore, in closing, I would like to suggest that the way that Mr. Campbell has attempted to Wurlitzer his own bad management and bad stewardship on this particular issue into a negative for his opponent, who, as you have made clear in your analysis, is only pledging to correct the problem, really is a really big issue.

Really.



_____
Oh, and for those playing the 'Battling Pols' game at home ....The way this has been done (the media wurlitzer-generated sliming of the opponent with negatives that are actually your own) is straight out of the Atwater/Ailes/Rove/Luntz playbook (page 67, paragraph 3).


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Anonymous said...

Ross: True that.
Paul: Yes, real issues. One of the issues is the too-cozy connection between the Libs and the business friends who have personally benefitted from their largesse. Another issue is the gross unfairness in a province that is so rich. Funny how both those issues are converged in this one issue (the topic, by the way, is the minimum wage), and sad that there has been no context-rich analysis in any media source that I've seen pointing out that it's the Libs friends spinning this into some populist issue, when it's really about a bunch of medium sized businesses keeping their workers poor and a political party helping them do so.

Gazetteer said...

Excellent point anon--

There most definitely is the additional deflector-spin element here (which the War Room would see as an added bonus, of course) that does help spike the minimum wage issue.

Will be interesting to see how the latter is dealt with if it is raised in tonight's debate (if there is any time to actually talk about any one single thing in a context-rich fashion).

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richmond2000 said...

#1 this sounds like fall out of standard election grade promises that are NOT fully costed / studied from inside
2# the minimum wage should be adjusted EVERY YEAR not left to become an election issue that will cut BOTH ways

seth said...

Note how almost nothing has been written by Canwest pundits about an almost certain 30 billion dollars in private power losses with BC Hydro buying power it can't use and must sell for an 85% loss on the spot market. And the BCLiberals promise to double that.

Yet here is an entire forest cut down to paper the province with comment covering some maybe as if 150 million max in beer price increases.

On one hand people will at worst have to walk an extra block to get some cheaper beer at the BC liquor store, on the other hand our power rates are due to double and our industries shut down because of uncompetitive power rates.

canada trader said...

What kind of crack pipe are you smoking?

I have never read in my life a more idiotic statements than the ones written here. You people probably need a highlighter to read the morning comics so you can remember the good parts.

I doubt there is anyone here that has posted that can even do grade 12 math.

Get the facts and understand how the real world works before you go shooting off your mouths about nothing you know anything about.

Anonymous said...

mom and pop:
Look at it from the view of a small store in a small labour market. We stock varied products some that sell often, some that don't. In the case of the product that sits on the shelf for a long time we have to pay monthly interest as most purchases are done with a credit card. We sell cold beer,coolers and ciders, and the cost to cool a product always goes up. Energy doesn't get cheaper. Our stores have to support our pubs which have been decimated by drinking and driving laws which is a very good law. The pubs have also been hurt by smoking laws. You go put out the money one year for a conforming smoking room only to have the regulations change a few years later. Then have another branh of big brother tell you that your patio is no longer allowed. The cost of insurance has almost doubled in the last five years, try making a long term budget for repairs and maintainance with that kind of escalation. Theft. Theft of one bootle removes any profit for the next twelve sold. Too add insult to injury we still have to pay ten percent taxes on some jerks free bottle. To get back to the small labour market, we have always payed our staff above the minimum wage as it is now, and what is proposed. We are all not the dreaded big companies that you refer to. Stop thinking that we need to be brought down a notch,quit working for someone else and try working for yourself. It's an eye opener. Invest your life savings in a small business and see. The NDP was a party that I always beleived in and voted for, but not now. You are going to make me, for the first time spoil my ballot or vote for the dilatante. Which I also think you are.

Anonymous said...

mom and pop:
mom and pop should read, mom and pop store. To the footnote the bcllc has not excepted new store applications for a few years now. Only relocation applications. To canada trader, man are you ever angry. By the way c.t., all I ever completed was grade ten, so have fun with my grammer and spelling mistakes. What bc needs now is a viable third party alternative. We are all at each others throats over a difference of opinions. Black or white, left or right, commie or big business goon. Jeez I hate bc politics. You,re all over the top in your defence of your talking head and your hate of the others. Get along children.

Anonymous said...

mom and pop store:
Holy intercourse Batman, I just loked at the prices in Victoria re- Hops Hypocrosy, we're getting screwed! But remember the bc stores price is without deposit, most private stores roll the deposit into the posted price. At least we do. WE also roll the chill charge into the final price not so at gov't stores that is extra . Now the price of our 12-pack bud is lower than the prices in the online article. What should we do Batman? Shutup Boy Wonder, and hand me that price gun. Look around you and in a copetitive market you will always find deals.

Anonymous said...

mom and pop store:
oops, competitive and branch. Anything else c.t.?

Anonymous said...

m.a.p.s.
About that stat in the footnote. Just where in all the gov't web sites did you find the 1294 figure? The bc lclb web site lists approx. 650 only.

paul said...

Hey Anon:
The stat on liquor outlets is from the provincial health officer's report on alcohol sales, at
http://www.health.gov.bc.ca/library/publications/year/2008/alcoholpolicyreview.pdf
Is the Liquor Distribution Branch number just government stores?

Anonymous said...

m.a.p.s.
No Paul that is thestat foe private stores. I have to wonder if the report you refer to is aa addition of the stores and the pub that has to be associated with the license.

paul said...

Hey anon:
The 1,294 liquor figure is accurate. According to the Liquor Distribution Branch service plan, there are 197 government stores, 676 private liquor stores, 227 rural agency stores, 202 brew and winery stores and 47 wine stores, for a total of 1384. (Up significantly from the number identified in last year's health officer report.)
Cheers
Paul

Anonymous said...

someone please tell nic the mla for p.r.+s.c. that if the discount goes down the price of a single shot of his scotch just went up.

Anonymous said...

m.a.p.s.
paul i just typed a long missive to you that didn't get through. the footnote says private stores not all of the above that you mention. the greatest con in any gov't or its associated branches is to blur the facts. think bush+iraq,gordo+martinis,clinton+monica,commies+truth. anybody who gets power has to. its the nature of power. transparency is just a word.