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October 26, 2009 (EM514) 
In Brief:
The Ethical Case for Getting Governments Out of the Business of ViceWhen most Canadians buy beer, wine or spirits from a provincial government liquor store, the focus of their attention is generally on what they buy, not on who sells it to them. Few will give a thought as to why their provincial government is in the alcohol business. Perhaps they should. Since the early 20th century, provincial governments in Canada have been in the alcohol business and currently, every province except Alberta sells much of the alcohol through government-owned retail outlets. Those opposed to privatizing government retail outlets argue it would harm society by increasing crime, consumption, and availability to minors while decreasing government revenues. Those in favour of privatization assert there would be no such detrimental effects.
A different perspective is to review why provincial governments got into the alcohol business, and to ask whether it is appropriate public policy to continue their involvement.
Established during the early 19th century, by 1898 the Temperance movement’s increasing power and popularity compelled the Liberal government of Sir Wilfrid Laurier to conduct a national referendum on prohibition. The result was a small overall plurality of fewer than 14,000 votes in favour, but with a large majority in Quebec voting against prohibition. Laurier chose discretion as the better part of political valour and did nothing. Laurier didn’t really need to act, since under the Canada Temperance Act of 1878 much of Canada had already elected to go “dry” by municipal plebiscite.
In the early 20th century, provinces began to introduce prohibition, beginning with Prince Edward Island in 1900. By May 1919, when Quebec restricted the retail sale of alcohol to wine, beer and cider, all provinces had introduced some form of prohibition.
Prohibition didn’t last long in Canada. During the 1920s most provinces repealed prohibition and began to sell alcohol through government stores. In 1948, PEI was the last province to go “wet”, though some Canadian municipalities continued to be “dry” under the Canada Temperance Act.
Thus, provincial government involvement in selling alcohol originated from the decision by each province to roll back prohibition after World War I. Rolling back prohibition increased the availability, legal consumption, and government revenues from alcohol, an addictive and harmful drug. Today governments spend billions of dollars each year on health care, social services and law enforcement to deal with alcohol’s harmful effects on individuals, families, and communities.
Governments have their ethics right in not being in the tobacco business. But it makes no more sense for a provincial government to be selling alcohol than to be selling tobacco, an addictive and harmful product that also absorbs billions of dollars a year in government spending to deal with its devastating effects.
Provincial governments are constitutionally responsible for health care. Accordingly, their focus should be to reduce the individual, family and societal damage from alcohol and tobacco by discouraging, regulating, and taxing these substances and by educating the public about their risks. It is illogical and unethical for provincial governments to be simultaneously in the alcohol business, selling a product that they know causes catastrophic individual, family and societal costs and harm. (Indeed, the same logic applies to provincial governments being in the gambling business.) When governments are in these businesses, they send the subliminal message to citizens that harmful and addictive substances and behaviours are OK--as long as the government is your dealer.
The ethical argument for privatization of the provincial government alcohol business is the logical mirror image of why there would be both understandable puzzlement and justifiable outrage were provincial governments to get into the tobacco business. If provincial governments shouldn’t be in the tobacco business, then for the same reasons, they shouldn’t be in the alcohol business. It’s not about ideology. It’s about ethics. It is no virtue to be in the business of vice.
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worked for the Province of Saskatchewan during a career spanning 25 years, including as Assistant Deputy Minister of Finance, responsible for Saskatchewan’s treasury and debt management functions and as the Chief Financial Officer and Vice President of Finance and Administration for Crown Investments Corporation, the Province’s holding company for its commercial Crown corporations. Born in Regina, he has a Masters degree in Economics from Carleton University, and holds the Chartered Financial Analyst (CFA) designation. As a semi-retired consultant living in Victoria, British Columbia, Sheldon continues his lifelong interest in public policy in Canada. His recent article, “Saskatchewan’s Crown Corporations— Time for a New Crown Review”, appeared in The Saskatchewan Institute of Public Policy’s Spring 2008 Policy Dialogue. |
Sheldon Schwartz 
