With the aversion of a strike by Ontario’s LCBO workers,
most of us will probably turn our thoughts to immersion in our favorite
beverage as we move into the Canada Day long weekend.
What the recent dispute should also spark is some
introspection regarding the special importance of Ontario’s crown corporations
– namely the Liquor Control Board of Ontario (LCBO) and the Ontario Lottery and
Gaming Corporation (OLG) – as sources of Ontario government revenue.
The accompanying figure plots data for revenues obtained
from selected Ontario budgets for four fiscal years: 2000, 2006, 2011 and 2016.
Both agencies are multi-billion dollar enterprises and bring in substantial
revenues for Ontario’s government.
In 2016, the OLG brought in $2.2 billion in revenues for Ontario while
the LCBO slightly less at just under $2 billion. With total revenues of about $128 billion in 2016, these two
items accounted for about 3.3 percent of Ontario government revenue.
What is more interesting is the performance over time of
these two items as government revenue sources. Essentially, lottery and gaming revenues have been quite
flat while government revenues from the sale of alcohol have been growing quite
robustly. Between 2000 and 2016, revenues from the OLG grew from
approximately $1.9 to $2.2 billion
dollars, an increase of 16 percent.
Meanwhile, over the same period, revenues from the LCBO
(which incidentally do not include revenues from liquor licenses/beer and wine
taxes that in 2016 came in a $0.582 billion) rose from approximately $0.8 to $2 billion – an increase of
about 132 percent. While OLG
revenues have essentially exhibited stagnant growth, the opposite is the case
for the LCBO. Indeed, to help keep
things in perspective, total government revenue over the period 2000 to 2016
grew 104 percent. Thus, LCBO
revenues to the government have been growing faster than its total revenues.
I am not surprised that a strike was averted. The LCBO has been doing very well. In a world of rising provincial government
spending, the alcohol (and its revenues) must flow!
