The New Brunswick New Democratic Party is continuing its tack toward the political centre, unveiling more platform planks meant to give voters a legitimate third option in advance of the coming provincial election. The party’s latest proposal aims to take a bite out of the province’s enormous mountain of debt, by creating an NB Liquor income trust that would allow private investors from within New Brunswick to take a share in the regular profits from the liquor monopoly. In exchange, the money generated from income trust sales would be applied to the provincial debt – a measure the NDP estimates could save the province tens of millions in interest payments.
There are a number of attractive elements about the NDP proposal. It retains public ownership of the Crown agency, yet the introduction of outside investment would encourage greater market discipline over the liquor corporation’s direction. Employees of the agency who also own investment units in the corporation are likely to show a stronger commitment to workplace excellence.
A sizeable amount of debt could also be paid off in a relatively quick fashion, a critical move in an era when interest rates have nowhere to go but up. And the NDP proposal could also lead to greater liberalization of liquor sales in the province, as income trust investors would no doubt push for greater efficiencies in liquor distribution – a move that would be of benefit to consumer as well.
We also believe that the NDP proposal fits with the model of a leaner and more nimble NB Liquor corporation. Because of aging provincial demographics, overall liquor sales are flatlining, and the agency is already trying to find ways to increase value from each product sold. The agency now has a CEO with extensive experience in the private sector, and is experimenting with wine sales in select grocery stores throughout New Brunswick. These reforms are necessary in order to improve the bottom line and increase an economic return to New Brunswick citizens, but continued economic challenges will no doubt force further reforms on the old liquor monopoly model.
Allowing individual New Brunswick investors to take a stake in NB liquor’s profits may provide an even greater impulse for more liberalized liquor sales in the province, and allow the provincial government to focus its attention on core priorities. It is certainly an idea that merits further discussion.