Government looks to privatize liquor warehouses, distribution.
Could see net gain of $ 700 million in 3 years by selling ‘ surplus non- strategic assets’
Privatizing liquor warehouses, coupled with Crown property sales, could provide $ 706 million in relief for British Columbia’s treasury, Finance Minister Kevin Falcon said Tuesday.
In a briefing before the introduction of a new budget in the Legislature, Falcon said BC Liberals have issued a request for proposals for the purchase of the Liquor Distribution Branch’s warehousing facilities and associated distribution services. It’s part of a fundraising effort that will encompass less than two per cent of the value of the Crown’s property holdings.
Government- owned liquor stores are not involved in the privatization.
“Government has on its books at any one time surplus properties in particular, but surplus assets that are non- strategic, that are costing us money. They sit on our books, when we could actually turn them into economic generators,” Falcon said.
The Liquor Distribution Branch ( LDB) operates two central warehouses, on East Broadway in Vancouver and in Kamloops, employing a total of 400 people who are members of the B. C. Government Employees Union.
BCGEU president Darryl Walker said the announcement caught the union by surprise.
Walker said he couldn’t speculate on the government’s motives for selling warehousing operations to the private sector.
“We had been talking to them, but we had been talking in terms of trying to increase revenues by talking about Sunday openings of liquor stores, where we believe in excess of $ 100 million annually would be available. Certainly the warehouses were not on our radar at all,” Walker said.
He questioned some “priorities” in the budget, including a one- year HST exemption for people buying second homes or recreational property outside the Metro Vancouver and Capital regional districts.
“Many British Columbians can’t even afford a first home, never mind a second one, and so you have to question what the direction and priority is,” Walker said.
The LDB warehouses supply 1,400 alcoholic beverage retail stores across the province including 197 governmentowned retail outlets, plus 8,000 bars and restaurants.
LDB retail stores account for 41 per cent of annual gross liquor revenues in B. C.
A customer survey, as reported in the LDB’S threeyear fiscal outlook, indicates that while 98 per cent of retail customers are satisfied with the branch’s stores, 80 per cent of warehouse customers express the same sentiment.
Falcon said B. C. began looking six months ago for opportunities to generate revenue from surplus properties and other assets.
“We’ve identified a very conservative $ 706 million that we believe can be realized as a result of that review. It is something which includes by the way the [ warehousing operations] of the Liquor Distribution Branch,” Falcon said.
“The LDB distribution we think is an opportunity for us to get out of a business we don’t need to be in, and allow the private sector to come in and manage a business much more effectively that government ever can.
“We are going to work with the union to make sure the RFP is designed in a way that will protect union interests, union workers, so that they can continue to transition into what we believe is an opportunity going forward.”
B. C, has identified more than 100 properties as surplus, including transportation corridors, vacant Crown land and “long- standing provincial holdings that are more appropriately developed by the private sector.”
The province has estimated a net gain of about $ 700 million over the next three years for the sale of some of them.
Falcon cited examples including a parking lot next to the Legislature in downtown Victoria which could be redeveloped as a commercial property with underground parking.
“We don’t want to go to taxpayers and say ‘ Give us more tax money’ nor borrow more money if we’ve got surplus non- strategic assets that are sitting there, that we’re not going to be utilizing, that can actually generate economic activity.”