Wednesday, February 27, 2019

Austin's proposal doesn't add up

Recently, the leader of the People’s Alliance – Kris Austin – put out a press release stating it’s time for government to privatize NB Liquor and Cannabis NB in the wake of former CEO Brian Harriman’s resignation.
While it is Austin’s right to voice his opinion, as an elected official we fee he should back up his statements with facts and proposals. In his release, Austin doesn’t offer solutions just makes vague statements and offers no supporting facts.
Let’s take a look at some of passages in the press release which are in italics.
The government has clearly demonstrated it’s not skilled in the art of running businesses with the staggering losses NB Cannabis has seen in its first few months of operation and with its inability to supply the market demands of the market since its inception.
This statement discounts several factors including NB Liquor is profitable and contributes millions to the provincial bottom line every year. As for Cannabis NB, it did miss its initial projections, but expecting a new entity to turn a profit immediately given start-up costs coupled with the mandate to educate and decrease illegal sales, means Austin is not looking at the whole picture which should be done by any elected official when making statements.
Also, Cannabis NB has had to deal with its suppliers not being able to meet orders it submitted, but Austin lays the blame at the feet of Cannabis NB as if it manufactures the product. Again, misleading and incorrect information.
Mr. Austin uses Alberta’s model of privatized liquor stores, which have been operating successfully since 1993, as an example of how this could benefit New Brunswick.
Mr. Austin is calling on Premier Blaine Higgs to seize this opportunity to beginning the process of getting out of running these retail businesses.
“If properly done, the government will stand to gain far more than it loses. The province should realize a huge increase in revenues taking its money directly off the top in the form of a flat tax. Manufacturers and suppliers should sell liquor products to licensees who then sell these products to consumers,” he said.
Holding up Alberta’s privatization of liquor stores as an example is not accurate on the part of Austin. Take a look at the 2012 study by the Canadian Centre for Policy Alternatives entitled ‘A Sober Second Look at Liquor Privatization.’
The following are excerpts of the conclusion found in the report:
1. The report shows how ironically, prices actually increased in Alberta after privatization and in BC, prices in the private stores are higher than in the public ones. So privatization hasn’t delivered lower prices as promised by free-market advocates. This result occurred in spite of the proliferation of liquor outlets in Alberta since privatization which should have increased competition and lowered prices.
2. Alberta, where retailers set their own prices, the value-added tax is not practical, so it moved to a unit sold tax – based on volume. Not only is the unit tax less fair (it’s like a flat tax), but it results in lower tax revenue.....The report demonstrates that higher prices have not delivered higher revenues in Alberta; in fact the province lost an estimated $1.5 billion in tax revenue since privatization.
So a successful model for Austin is one that results in higher prices for consumers and a decrease in revenues for the provincial coffers.
Call us crazy, but we would rather keep the system with good paying jobs and higher revenues.