The Ontario Beer Stores are owned by the big three breweries, and have a semi-exclusive deal to sell beer in the province. Ontario now wants to break that deal to allow other stores to sell beer. (Jeff Walters-CBC)

Alcohol and austerity: Ontario government takes action

Canada’s most populous province, is also one of the most indebted political jurisdictions in the world.

After years of Liberal government, citizens opted for change with the Progressive Conservative party headed by former Toronto city councillor Doug Ford. He had promised sweeping changes to reduce the huge public debt, measures which have resulted in some controversy as he tried to reduce the province’s $14.5 billion deficit.

Another move is to open up competition in beer, and wine sales.

The latest move on the austerity front is a proposal to cap public service salary increases at one per cent over the next three years.

The government says public sector salaries represent almost half of all the provinces expenditures at some $72 billion annually.

The Ontario provincial legislature in Toronto known as “Queen’s Park”. The Ford government wants to cap public sector salaries as part of its austerity government dealing with massive debt by years of the previous Liberal government (Mike Crawley-CBC)

The proposed bill, called “Protecting a Sustainable Public Sector for Future Generations Act” notes it does not call for wage freezes or rollbacks, but that the limits on salary increases represents the fiscal reality facing the province.

The government will be accepting feedback during the summer and will be debated in the fall after a longer summer recess. The provincial government usually rises after the first week of June and returns after the Labour Day holiday which would mean the week of September 9, but the government has extended the break to the end of October and the week after the federal election of October 21.

As for alcohol, beer and wine sales, the government announced it would increase the number of its provincially run liquor stores, eventually with 300 more outlets in smaller underserved areas.

Finance Minister Vic Fedeli revealing a plan to open 200 ‘LCBO Convenience Outlets’ by spring 2020. He also defends the ending of the deal with the Beer Store, saying the government has the right to break bad deals signed by the previous government that hurt the people of Ontario (Martin Trainor/CBC)

More contentious however, the Ford government is breaking a semi-monopoly 10-year deal signed by the previous Liberal government with Canada’s big three breweries. Labatt, Molson, and Sleeman. Together they have operated the provincial “Beer Store” with outlets across the province since 1927. The three, once proud Canadian breweries are now foreign owned. The Ford government wants to expand beer and wine sales to convenience stores, more grocery stores, and to big box outlets.

The Beer Store said it would challenge the move in court.

Now even the U.S. Chamber of Commerce has weighed in saying that breaking the contract sends a negative signal to U.S investors.

In saying the previous deal shut out small businesses from the beer and wine market, provincial Finance Minister Vic Fedelli quoted in the CBC responded, “”Our parliamentary system ensures that a new government is not bound by a bad deal signed by a previous government that hurts the people of Ontario. The U.S. Chamber of Commerce, and all chambers of commerce, should be encouraged by our government’s tax reforms and plan to reduce red tape”.

Additional information – sources

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