Would privatizaton be a good thing?

Killing the goose that laid the “Golden Egg” is among the most famous of Aesop’s Fairy tales. It is the story of a cottager and wife who had a goose that every day laid a golden egg. The couple believed that the goose contained a huge lump of gold and they killed the goose to grab the gold, only to find out that the goose was totally common. In killing the goose they lost their wealth generator and were deprived of all the good things that the goose could provide for them in the future.
The provincial government has two golden geese that they look after. The first is the LCBO. In the last fiscal year, the corporation, which is totally owned by the provincial government, had $4.7 billion in sales and delivered $1.63 billion to the general funds of the province. It also delivered $415 million in HST and $352 million in excise taxes to the federal government.
The LCBO is a monopoly and from time to time, the province has looked at getting out of the liquor business and turning it over to private corporations such as is done in Alberta. With the monopoly, the province has been able to set very high prices for alcohol products sold in their stores. There is a belief that the province might be able to generate even more revenue from privatization through increased sales and competition.
The other golden goose owned by the provincial government is the Ontario Lottery Gaming Corporation (OLG). In 2011 revenues grew by over $400 million and resulted in a profit of $2 billion that went into the general revenue pool of the provincial government. That money was earmarked for Ontario’s hospitals, schools, charities, amateur sports and culture. The Minister of Finance had asked the OLG to find an additional $100 million in operation savings in 2012 to put toward the government spending.
While all that is taking place, the government suspects that the OLG is missing out of customers who aren’t as keen to frequent stores with the blue box terminals to buy tickets. The government suspects that there might be even more money that can be taken from Ontario resident’s pockets if gambling was made easier. A strategic business review of Lottery and Gaming in Ontario offered three recommendations. They are to expand regulated private sector delivery of lottery and gaming, increase support for responsible gambling and review the role of the OLG in oversight.
One of the concerns expressed in the study was the need for the OLG to lessen the burden of capital costs on the public purse. And to follow that advise the OLG is now looking to privatize the OLG. One of the corporations that are looking to run the lotteries for a ten-year period is the Camelot Group, which operates Britain’s national lottery. The Ontario Teachers’ Pension Fund owns the Camelot Group.
The question becomes, “Will Ontario see a growth of money flowing into its coffers at the same rate that it has seen since 1975 by a privately operated system?” Will modernization attract a new and younger demographic group to play the lotteries? What changes might take place so that people can play the lotteries on their smart phones, and tablets from the comfort of their chairs without having to go to their neighborhood convenience store to play the lottery?
And finally will the “Golden Goose” survive and grow?
. . .

Clarification
In last week’s column I failed to mention that both the town of Fort Frances and the town of Atikokan with T-Bay Tel were part of the original shareholders bringing cell phones to the Rainy River District.

–Jim Cumming,
Publisher