Ontario looks to unload Crown corporations?

[matix]

yeah, forget this.

they whould fast track ORC's sell of of prov. surplus lands.

 

[TrickyRicky]

I'm not for or against the sale of these assets. My question is what is the motivation for raising the issue now? "Because we are spending more than we make and we need money now!". That doesn't sound like sound fiscal management.

Also, if we are talking about maximizing the sale price of the asset, going into the negotiations in a "because we need money now!" mentality is not exactly your best position to be in. No wonder governments aren't known for getting the best prices for assets and negotiated contracts.

Since this issue is raised every time the government needs money I suspect it is largely a red herring. The question is what is it distracting our attention from exactly?

 

[Second_in_pie]

God, I hope they don't do this. There's a reason these businesses are under control of the provinces: because they need to be regulated. It'd be short term gain for long term hurt with this, and I don't think the current Ontario deficit warrants that. Anyways, the LCBO already makes the province millions of dollars. It'd be better to have it and milk it out instead of getting a bit more for it now and never seeing that income again.

 

[Admiral Beez]

the 1.4 billion yearly loss becomes someone else's problem in the long run.

Simple to fix. You sell the LCBO, but charge the new owners $1.4b per year for exclusive selling rights in Ontario. The new owners will quickly reduce costs and increase revenues, thus making up the $1.4b annual fee, while still making huge profits for themselves.

 

[afransen]

Simple to fix. You sell the LCBO, but charge the new owners $1.4b per year for exclusive selling rights in Ontario. The new owners will quickly reduce costs and increase revenues, thus making up the $1.4b annual fee, while still making huge profits for themselves.

I'd rather we didn't have a monopolist making huge profits from us Ontarians. Open the market and levy a tax on alcohol sales. The LCBO won't be worth as much, but then we won't have someone with a license to gouge Ontarians.

 

[CodeMonkey]

Simple to fix. You sell the LCBO, but charge the new owners $1.4b per year for exclusive selling rights in Ontario. The new owners will quickly reduce costs and increase revenues, thus making up the $1.4b annual fee, while still making huge profits for themselves.

Good idea; but no private investor would shell out $1.4 billion a year. Plus cost reductions will only occur if you have more people buying alcohol to help turn a profit for a private investor.

 

[Tacoma]

This was mentioned earlier, when you hear that huge profit that they "made" - they include the taxes related to alcohol. The actual profit (without the taxes) is actually quite small. Private companies of course can't play games like that when reporting numbers (of course the tax would not be theirs, but technically speaking the crown corporation does not get the tax as well - that goes to the government general revenues).

This is it. What exactly are the real after-tax margins like? The licensing costs will be so high that only a few large corporations like Loblaws or Walmart will be able to make a business case for it (e.g., having an LCBO store within Loblaws will bring more traffic to that store).

At the same time, these fat cat licensees will be forced to adhere to restrictive government imposed floor pricing policies; be told where they can set up shop; be intensely regulated from importing, wholesale & distribution to retail sales and service operations; and if you're only a retail license holder, be told who you must buy your products from. And then after the 5- or 10-year term, risk losing everything by having to re-bid for the same license(s) again on equal footing with your competitors. And then people are talking about increasing alcohol taxes further forcing price increases or cutting into margins. This sounds to me to be incredibly onerous and possibly unrealistic. The BASR Panel report linked above doesn't explain any of this. A waste of public money if you ask me (which turns out to be true because nothing signficant became of it).

To me, privatization without material deregulation is a waste of time, effort and money as I don't really see the result as being materially different than what we have now.