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The Rise of the Liquor Control Board of Ontario and the Demise of the Alberta Liquor Control Board: Why Such Divergent Outcomes? By Malcolm G. Bird A dissertation submitted to The School of Public Policy and Administration Carleton University Ottawa, Ontario Canada In partial fulfillment of the requirements for the degree of Doctor of Philosophy © Malcolm G. Bird, 2008 Library and Bibliotheque et 1*1 Archives Canada Archives Canada Published Heritage Direction du Branch Patrimoine de I'edition 395 Wellington Street 395, rue Wellington Ottawa ON K1A0N4 Ottawa ON K1A0N4 Canada Canada Your file Votre reference ISBN: 978-0-494-43886-2 Our file Notre reference ISBN: 978-0-494-43886-2 NOTICE: AVIS: The author has granted a non­ L'auteur a accorde une licence non exclusive exclusive license allowing Library permettant a la Bibliotheque et Archives and Archives Canada to reproduce, Canada de reproduire, publier, archiver, publish, archive, preserve, conserve, sauvegarder, conserver, transmettre au public communicate to the public by par telecommunication ou par Plntemet, prefer, telecommunication or on the Internet, distribuer et vendre des theses partout dans loan, distribute and sell theses le monde, a des fins commerciales ou autres, worldwide, for commercial or non­ sur support microforme, papier, electronique commercial purposes, in microform, et/ou autres formats. paper, electronic and/or any other formats. The author retains copyright L'auteur conserve la propriete du droit d'auteur ownership and moral rights in et des droits moraux qui protege cette these. this thesis. Neither the thesis Ni la these ni des extraits substantiels de nor substantial extracts from it celle-ci ne doivent etre imprimes ou autrement may be printed or otherwise reproduits sans son autorisation. reproduced without the author's permission. In compliance with the Canadian Conformement a la loi canadienne Privacy Act some supporting sur la protection de la vie privee, forms may have been removed quelques formulaires secondaires from this thesis. ont ete enleves de cette these. While these forms may be included Bien que ces formulaires in the document page count, aient inclus dans la pagination, their removal does not represent il n'y aura aucun contenu manquant. any loss of content from the thesis. Canada Abstract This thesis will explore the divergent fates of the Alberta Liquor Control Board (ALCB) and the Liquor Control Board of Ontario (LCBO). It will focus on answering one question: why did the governments of Mike Harris and Ralph Klein do such drastically different things with their respective liquor boards? In 1993 Klein liquidated the ALCB and established a private market to distribute alcohol while Mike Harris not only retained the LCBO in public hands, but poured significant amounts of capital into it so that it could complete its modernization process. His government did more than any other Ontario government to solidify the public ownership of the LCBO. The answer to the question lies in the province-specific contextual differences between Alberta and Ontario. The Klein government privatized the ALCB because such a move would show the citizens that this was a 'new' government that was going to radically alter the governing structure in the province. It had widespread public support and there was little organized opposition to the government's very decisive and speedy policy shift. Interestingly, the structure of the resultant marketplace was not designed to be the most efficient in an economic sense, but rather was designed to favour one particular constituency, independent small businesses. In the case of Ontario, the Harris Tories never considered privatizing the LCBO because such a move would meet stern resistance from a number of very influential interests such as the Ontario wine producers and the large Ontario brewers. With privatization off the policy table, the government poured money into rebuilding the LCBO because such a policy, it was reasoned, would increase the government's revenues by altering consumer preferences to purchase more high-value products and, most critically, retaining the LCBO would maximize the monopoly rent portion of its remittances to the government. The thesis draws upon historical institutionalism (HI) and John Kingdon's multiple streams decision-making model to structure its descriptive and analytical components. Hi's emphasis on the seminal importance of history, context and the endogenous nature of preferences, among other characteristics, is the most suitable framework from which to explain the two divergent sets of decisions from both governments. Both liquor boards, furthermore, helped to shape their respective fates at the hands of their political masters and were sent down distinctive trajectories long before the election of either the Harris or the Klein governments. Kingdon's theory is encapsulated within HI and is used to analyze the actions and mindsets of the key decision makers. The continued presence of government-owned liquor boards in the retail and wholesale sectors of the alcoholic beverage industry, with the exception of Alberta and exemplified by the LCBO, raises some interesting questions about Canada, the relative influence of neoliberalism on policy formation and how Canadian governments choose to solve collective action problems. 2 Table of Contents Page Abstract 2 Acknowledgements 4 Introduction Unique Contexts, Different Outcomes: The Fates of the LCBO and the ALCB 6 Chapter One Historical Institutionalism: Accounting for Time, Place and Context 42 Chapter Two The Rise of the LCBO: History, Politics and Context 87 Chapter Three Fast, Pragmatic and Ideological: The Privatization of the ALCB 141 Chapter Four Explaining our Outcomes: Different Contexts, Different Outcomes 190 Chapter Five The Significance of our Cases: Canada, the State and Liquor 224 List of References 248 3 Acknowledgments For an eight-year-old boy who could not read, I have done well. My scholastic success is due solely to the unconditional love and support from my parents, Bridget and Geoff Bird. My loving and devoted wife, Jennifer, has not only read and copy edited countless drafts, but has provided encouragement and support throughout much of this entire process. Thank you. And, of course, to Alice Joan, our perfect daughter whose birth in the midst of the writing process provided a wonderful distraction to thinking and writing about provincial liquor boards. Others who have been seminal forces in my pre-doctorate life are Dr. Roberto Perin of York University's history department and Dr. Alexis Lachaine, both of whom have provided much intellectual stimulation and collegial support. Thanks also to Dr. H.T. Wilson of York's political science department who sparked my initial interest in public policy. My research required travel and extended stays in both Toronto and Edmonton. Special thanks to the Heidenreich family of Toronto, who kindly provided a comfortable place to stay in the city, and to my parents-in-law, Joan and Terry Wispinski, who made my stay in Edmonton much more enjoyable. Success in a graduate program, above all, depends on choosing your committee very carefully; mine, thankfully, has been wonderful to work with. My supervisor, Dr. Christopher Stoney, has given me constant support and valuable feedback throughout the entire thesis process. Drs. Lisa Mills and Maureen Molot have provided insightful and prompt comments. Both insisted that my empirical findings be linked to a theoretical framework and while this was at times a frustrating requirement, it helped to make a much better final product. Of course, it takes an entire department to help a student finish their thesis. The department of public policy and administration at Carleton is a place of very divergent intellectual views, all of which have helped me to find my way through the world of Canadian public policy. Special thanks to Drs. Manfred Bienefeld, Rianne Mahon, Stanley Winer, Saul Swartz, Bruce Doern, Les Pal, Phil Ryan, Stephan Schott, Allan Maslove, Stephanie Paterson and Gene Swimmer. Meghan Innis and Iris Taylor made navigating graduate school much easier. No research in public policy would be possible without the cooperation from many individuals employed within the public sector. Their generosity with their time for this project, and their public service, more generally, helped to make this thesis, and the story it tells, possible. There is much talk today about the importance of accountability and transparency within the public sector; those who participated in this project put such rhetoric into action by providing invaluable information to the author. I am most grateful. In Ontario, a very special thanks to: Andy Brandt, Bob Peter, Gerry Ker, Larry Gee, Julian Lewin, Steven Diamond and Barry O'Brien all from the LCBO. Other key sources in Ontario were Jan Westcott, Heino Nielson, Linda Franklin, D. Murray MacKenzie, David Tsubouchi, John Toogood, David Lindsay, Guy Giorno, Andrew Murrie, Tim Hudak, Jeffrey Newton, Duncan Brown, and Frank and Cameron Heaps. 4 In Alberta, I was met by an equally receptive group. A very special thanks to: Dr. Steven West, Bob King, Jack Davis and Norm Peterson. Others who gave of their time were Robert Ascah, Lindy Rollingson, Dave Kaiser, Joe Becigneul, John Szumalas, Ed Swaka, Len Blumenthal and Greg Flanagan. Drs. Lois Harder and Douglas West, both of the University of Alberta, helped the researcher to make sense of the collected information. Thank you as well to any others whom I've forgotten to mention by name. Any and all errors in logic or judgments, conclusions, omissions and any other deficiencies are, of course, the sole fault of the author. 5 Introduction Unique Contexts, Different Outcomes: The Fates of the LCBO and the ALCB "We did things like privatize our liquor stores. That was unCanadian."1 Mr. Klein makes a valid point. Of all Canadian provinces, only Alberta has privatized its liquor distribution system, by selling the Alberta Liquor Control Board (ALCB) in 1993 and implementing a private retail market to sell alcohol.
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