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Ontario Liberal party leadership candidates Sandra Pupatello (left) and Kathleen Wynne share a laugh as Harinder Takhar (behind) packs his papers following a forum at the Canadian Club of Toronto in Toronto on Thursday December 6, 2012.

Frank Gunn/THE CANADIAN PRESS

Two of the rivals for Premier Dalton McGuinty's job have come out in favour of selling beer and wine in corner stores, marking the first major policy difference among the Liberal leadership contenders.

At an all-candidates debate in Toronto on Thursday, Sandra Pupatello and Glen Murray endorsed giving corner stores and supermarkets the right to sell beer, wine and spirits.

Mr. Murray kicked off what turned out to be the liveliest portion of the one-hour debate at the Canadian Club of Toronto by saying he enjoyed the fact that he could buy a bottle of wine at his neighbourhood dépanneur when he lived in Quebec.

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He said the model in that province, where the government owns the liquor board, the Société des Alcools du Québec (SAQ) but allows wine and beer to be sold in corner stores, has helped mom-and-pop shops, which had been losing market share to large retail chains.

"I think we should steal from our neighbours," Mr. Murray said.

The debate, moderated by TVOntario host Steve Paikin, provided the second opportunity for the seven candidates, all former cabinet ministers, to square off against each other. The candidates were asked to respond to Progressive Conservative Leader Tim Hudak's proposal this week to radically overhaul the province's alcohol distribution system.

Ms. Pupatello, who was renowned around the provincial legislature for her highly partisan attacks on opposition members, embraced the idea of being able to buy groceries and wine under one roof while simultaneously making Mr. Hudak appear out of touch with the province he seeks to lead.

More than 200 mini liquor stores already operate inside grocery retailers throughout rural Ontario and in cottage country, Ms. Pupatello said. "I think we need to tell Tim Hudak that. He's too Toronto to be running for all of Ontario," she said of a leader who grew up in a small town in Ontario and who represents the largely rural riding of Niagara West-Glanbrook.

But Ms. Pupatello also challenged her leadership rivals not to be afraid of change.

"I need my colleagues here, as well, to know that there's a big old province out there, and if you're in a little town in Ontario, where I've spent lots of time lately, they don't have all this infrastructure for fancy flagship LCBOs like on Yonge Street here in Toronto," she said.

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However, when it comes to privatizing Ontario's retail monopoly on liquor sales, she added, Mr. Hudak needs to explain how the government would replace the revenue it would lose. The Liquor Control Board of Ontario had sales of $4.7-billion in fiscal 2011-12 and paid a dividend of $1.63-billion to the province – money that helps pay for health care and education.

However, four candidates outright rejected allowing grocery stores to get into the beer-and-wine business. Kathleen Wynne, widely viewed as a front-runner along with Ms. Pupatello in the race to replace Mr. McGuinty, was characteristically blunt in rejecting the Tories' proposal, unveiled this week.

"I'm a bit of the, 'If it ain't broke let's not try to fix it,' school of thought," Ms. Wynne said. "I like the LCBO the way it is."

The McGuinty government has also ruled out privatizing the LCBO because of concerns that the province would not be able to replace the revenue it receives from the corporation. Finance Minister Dwight Duncan, one of the 15 Liberal caucus members who has endorsed Ms. Pupatello for leader, noted that the government rejected a 2005 report that recommended privatizing the LCBO because the report, which he described as "pretty weak," provided no road map on how the government would generate revenue.

"Why would you give up that revenue stream," he told reporters. "That's what you're going to do under any model."

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