The B.C. government rejected the notion of privatizing the provincially controlled liquor distribution business until it was courted by a private company and its lobbyists, a New Democrat MLA says.
Documents released through an access to information request indicate the government shifted gears after cabinet minister Shirley Bond met with representatives of Exel Canada, a subsidiary of Germany’s Deutsche Post DHL – the world’s biggest distribution company – that is bidding to run the privatized operation, MLA Shane Simpson said on Thursday.
“What we have here is a clear indication that there was no interest, no discussion with industry, no debate or discussion within government,” Mr. Simpson said, referring to e-mails and briefing notes the party obtained and released on Thursday.
The government announced plans in February to privatize the Liquor Distribution Branch’s warehousing and distribution arm.
At the time, the government said the privatization – announced with the provincial budget – would provide an unspecified capital gain and “create an opportunity to find more efficient ways to distribute liquor in B.C.” Critics have questioned whether privatization would result in higher prices for consumers, and how much, if any, money the government would save.
In one e-mail released on Thursday, dated June 13, 2011, then-Solicitor General Shirley Bond told an Exel executive the government was not considering any significant changes to the existing liquor distribution system. Another e-mail shows that, in August, after Exel representatives spoke to Ms. Bond at a golf event in Prince George, Ms. Bond met with representatives of the company to discuss its privatization proposal.
The government announced the distribution plan in February.
The timing of the government’s decision suggests it was responding to pressure from Exel, Mr. Simpson said.
In a conference call with reporters, Labour Minister Margaret MacDiarmid – whose ministry is overseeing the request for proposals for the distribution business – said the province has considered privatization of the business, off and on, since about 2002.
The government, not Exel or its lobbyists, steered the process, she added.
“I want the public to feel confident about what we’re doing here and why we are doing it,” she said, adding that it is not unusual for companies to make business pitches to governments.
“It’s hard for me to understand how anyone in British Columbia would be opposed to us pursuing something as government that might find us some cost savings.”
Exel is one of six companies named earlier this month as having responded to the government’s request for proposals.
Ms. MacDiarmid would not provide a figure for how much money privatization is expected to save, but said the process would have to reduce costs for the government to see it through. The government plans to announce a short list on July 20 and sign a contract by March, 2013, before the May provincial election.
In an e-mail to a member of Ms. Bond’s staff dated July 4, 2011, Exel vice-president Scott Lyons said his company’s proposal could “almost immediately unlock over $100-million of the B.C. government’s money tied up in assets.”
Potential savings are being questioned, as warehouses that are part of the system – and have assessed property value of about $30-million – would not be included in the first stage of privatization.
The government should provide a sound business case or halt the process, Mr. Simpson said.
Ms. MacDiarmid said bidders will have to show how such savings could be generated.
“If we don’t find that there’s significant savings, we’re not going to go ahead with it,” Ms. MacDiarmid said.
The Liberals are sagging in public opinion surveys, with a recent poll putting NDP Leader Adrian Dix ahead of Premier Christy Clark as the person best suited to deal with the economy, health care and crime – issues in which the Liberals once held the lead.
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