Ontario Premier Doug Ford pretends to drink from a beer can and Finance Minister Peter Bethlenfalvy holds one at an announcement saying the province is speeding up the expansion of alcohol sales in May.Christopher Katsarov/The Canadian Press
Ontario Premier Doug Ford’s accelerated deal to expand alcohol sales to corner stores and other retailers will cost provincial taxpayers $1.4-billion over the next six years, the legislature’s financial watchdog says, much more than first disclosed.
The price tag calculated by the province’s independent Financial Accountability Office, in a report released Monday on the eve of Mr. Ford’s impending snap election call, is well above the $225-million in potential payments to the private-sector Beer Store chain the government revealed when it announced its alcohol liberalization plan last May.
That money was meant to ensure that a minimum number of Beer Store locations, which take empties back for the province’s deposit system for alcohol containers, stayed open until the end of this year. The government had acknowledged that there would be other costs under its new arrangement with the Beer Store, including millions in rebated fees, but had not provided comprehensive cost estimates.
The alcohol deal, which allowed beer in corner stores 16 months earlier than previously possible, fulfilled a stalled Progressive Conservative election promise from 2018. But opposition critics have charged that the sped-up agreement was just a taxpayer-funded stage-setter for an early election call. Mr. Ford is to trigger the move on Tuesday, with Ontarians going to the polls Feb. 27.
The government could have allowed beer in corner stores merely by waiting for the 10-year deal signed with the Beer Store in 2015 to lapse at the end of this year – in time for what would have been the next regularly scheduled election in June, 2026.
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On Monday, the FAO said that of its $1.4-billion cost estimate, $612-million is directly attributable to payments and lost revenue until Jan. 1, 2026, when the original Beer Store deal would have expired. Another $817-million of the total relates to the costs to taxpayers from then until 2030, when the new transition agreement signed last year runs out.
In all, government support for both the wine industry and the Beer Store will run to $489-million, the agency says, a total that includes that initial $225-million for the beer retailer, which is controlled by multinational brewing giants.
The reduction in provincial tax revenue comes to a whopping $1.28-billion, as sales shift to the new outlets, where purchasers are not charged the same alcohol taxes.
But the FAO also says some of the losses will be offset by $353-million in increased net income over the next seven years from the Liquor Control Board of Ontario, which is serving as the monopoly wholesaler for the corner stores and other new outlets. This increase comes despite a 10-per-cent wholesale price discount granted to the new outlets.
The FAO also said that its estimates depend on whether the current downward trend in alcohol sales continues and how fast booze sales migrate to the new outlets, meaning the total cost of the deal could range from $529-million to $1.9-billion.
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The government defended its accelerated alcohol deal. Colin Blachar, a spokesman for Finance Minister Peter Bethlenfalvy, whose portfolio includes the province’s alcohol sales regime, issued a statement saying that much of the price tag identified by the FAO comes from deliberate policy decisions to lower taxes and fees on booze and save consumers money.
“We were elected twice on a promise to deliver people with more choice and convenience, and to end one of the worst deals in the province’s history that shut out local businesses in favour of large foreign corporations,” he said.
Beer, wine and cider and premixed drinks have been available in participating convenience stores, big-box stores and an increased number of supermarkets since last fall.
Liberal Leader Bonnie Crombie, whose party had previously estimated the true cost of the deal was $1-billion, cited the higher end of the FAO’s estimates, at $1.9-billion, on Monday, and said the cash should have gone to the ailing health care system.
“Doug Ford gave $1.9-billlion of your hard-earned money to big beer companies and his American billionaire buddies who own 7-11 and Costco,” Ms. Crombie told reporters at Queen’s Park.
NDP Leader Marit Stiles told reporters in Brampton that the alcohol deal shows Mr. Ford is a bad negotiator.
“Doug Ford is costing Ontarians billions of dollars,” she said. “We can’t afford it any more.”
Early in Mr. Ford’s first term, the promise of corner-store beer was shelved after talks with the Beer Store, which is controlled by the Canadian arms of global beer giants Molson Coors and Anheuser-Busch InBev, went nowhere. The Globe and Mail reported at the time that the government could have had to pay up to $1-billion in compensation to kill the Beer Store deal.
The Ford government even passed legislation to erase the deal unilaterally and exempt the province from paying compensation, but the bill was condemned by the U.S. Chamber of Commerce and never implemented.
The 2015 deal was signed by the Liberal government of Kathleen Wynne and extended the Beer Store chain’s monopoly on 12- and 24-packs of beer for 10 years, but allowed beer sales in up to 450 grocery outlets.