Day: June 2, 2021

Ending liquor monopoly in Ontario would be win-win-win

Rethinking the LCBO could save taxpayers a tremendous amount of money

Ontario is teetering on the edge of a fiscal cliff. Under its previous Liberal government, the province became the most indebted sub-sovereign unit in the world. Unfortunately, poor policy-making and the COVID-19 pandemic have only worsened its situation. Ontario’s debt is now over $404 billion, which means each Ontarian’s share of that debt is a whopping $27,000.

As the pandemic ends, Ontario will need bold policy-making to dig itself out of the hole it’s in. One bold policy that would help is privatizing the LCBO (Liquor Control Board of Ontario), or at a minimum capping its expansion and ending its monopoly status.

Scrapping the LCBO and shifting to a private, preferably uncapped, retail model would benefit consumers by offering them more choice and convenience. Ontario currently has the worst alcohol retail density in Canada, mostly because the combination of a government monopoly (LCBO), with a government-sanctioned private monopoly (The Beer Store) has limited the scalability of retail access. As a result, Ontario has only one alcohol retail outlet for every 4,480 residents. In comparison, British Columbia has one store for every 2,741 residents, Alberta one for every 1,897 residents, and Quebec one store for every 1,047 residents. Ending the LCBO’s monopoly would help bring Ontario onto a par with other provinces.

More importantly, rethinking the LCBO could save taxpayers a tremendous amount of money. The LCBO’s operating costs are bloated. Based on its 2019 annual financial statement, the average sales, general and administrative (SG&A) cost per store is $1,515,000 per year. With 666 corporate stores, that is a considerable expense to taxpayers. Private alternatives, like high-inventory private retailers in Alberta, cost significantly less to operate. Based on Alcanna’s 2019 annual financial report, the average SG&A for a private outlet comparable to an LCBO, is just $676,000 per year. If we could snap our fingers right now and fully transition the LCBO out of the government’s operating model, taxpayers would save an astounding $559 million per year. If the Ford government is looking for low-hanging fiscal fruit, this is it.

Labour unions and other supporters of nationalized alcohol distribution would obviously have an issue with the complete elimination of the LCBO. They will argue that privatization would threaten the well-paying jobs of the thousands of Ontarians who work for the LCBO. This could be true, as it’s unlikely that private retailers would require their workers to be members of OPSEU, the Ontario Public Service Employees Union, which has negotiated wages well above the market rates for comparable jobs. That said, there is a compromise solution that both expands consumer choice, maintains those LCBO jobs, and saves taxpayers millions of dollars. It is to stop the LCBO from expanding its operations and let the private sector fill the void.

Each year, on average, the LCBO, makes a net addition of seven new stores in Ontario. If the province were to simply stop the LCBO’s expansion, and have the private sector fill the gap, taxpayers would cumulatively save $88 million after five years. At the 10-year mark that figure would be $323 million. And these savings are only the ongoing operational savings and don’t include the tens of millions of dollars the LCBO spends to acquire storefronts for expansion.

This compromise solution would allow the LCBO’s existing outlets to remain operational, while also allowing for more retail access and a hybrid model moving forward. On top of the cost savings, there might well be revenue gains. Hybrid and private retail models for alcohol sale (as in B.C. and Alberta) actually generate more alcohol tax revenue per capita, a further benefit for the public purse. Politically, this compromise solution is a no-brainer. Increasing access, fuelling private business opportunities, generating more revenue, and all the while maintaining current LCBO employment would be a win-win-win.

The Ford government has already laid the groundwork for such an approach. Buried in the licences and permits schedule in the 2019 budget, the province effectively cleared the way for a truly free and open alcohol market in Ontario. The bill states that “A person may apply to the Registrar for a licence to operate a retail alcohol store, operate as a wholesaler, or deliver alcohol.”

Ontario has opened the door for a consumer-friendly retail model for alcohol that would finally end the LCBO’s monopoly. Full privatization would be best but if that is too great a stretch politically, a free-entry compromise would still benefit all Ontarians. The government has created the possibility of such a change. For the sake of consumers and taxpayers, it should now follow through.

Originally published here.

Sustainability: the European word-battle

It will mean something different to everyone.

The Farm to Fork Strategy of the European Union attempts to foster sustainability in the agricultural sector. While sustainability is a laudable goal in a general sense, it has a wide range of possible meanings and applications. EU institutions have adequately defined the word. 

It is necessary to establish a clear and precise definition of what we mean by sustainability, as only this will allow us to set concrete goals and objectives and develop clear and precise metrics to track our progress in achieving them.  The implication from the European Commission seems to be that organic agriculture is essentially synonymous with sustainable agriculture. But that is a mere assumption, made without reference to a host of practical concerns and obviating any real scientific examination of the facts. 

The European Commission’s web page for sustainable agriculture lauds the improvements on sustainability made by the Common Agriculture Policy (CAP), yet it has not established a definition that matches the goals met by the policy. The Farm to Fork Strategy is a political roadmap that outlines certain numerical goals, yet the claim that these goals are sustainable is merely implied. In order for European consumers to understand the objectives of the European Union in the realm of sustainable agriculture, we need to establish definitions that concisely describe what sustainable agriculture is.

In any given webinar or even the word sustainability can be thrown meaninglessly, often supporting the speaker’s agenda. That speaker is often a supporter of agro-ecology or the food production system that rejects the advancements of modern agriculture. And that is fair game; those advocates have to have their voice in the democratic process. That said, they are often co-opting a term that has yet to be well-defined. You can take the test: stop an average consumer in the street and ask whether we should want more sustainable food. Who would possibly disagree with that? As to whether we should support sustainable food without defining what that means, is much like asking whether or not we should want “good” food. We will have different understandings of what that implies. In the organic sector, standards of sustainability would not be met.

Credible research has established that moving all current farming to organic farming would increase greenhouse gas (GHG) emissions by up to 70% . Researchers analysed the hypothetical move of Welsh and English farm production to organic, and found that reduced crop yields in organic farming increased the need to import food from overseas. Including the GHGs emitted growing that food abroad — a part of the equation often ignored advocates of organic agriculture — otal GHGs emitted would increase between 21% in the best-case scenario to an astounding 70%, depending on how much natural habitat and forest had to be cleared to make up for the decline caused by England’s and Wales’ switch to organic production. For the European Union, which aims at a 25% organic production target in Europe, the impact of overseas imports would be even more considerable. While the study assumed England and Wales would import the majority of the extra food they needed from Europe, a 25% organic EU would be making up its production deficits by importing food grown in less developed countries with considerably less efficient farming methods, which would significantly increase emissions.

So while we’re in the business of defining sustainability, why don’t we deal with the facts and only the facts?

Originally published here.

Boris Johnson’s interventionist obesity strategy will fail. We need more choice, not less to slim down

Obesity is on the rise like never before. More than one in four people in the UK are now obese, one of the driving forces behind the mortality rate from Covid. In the year leading up to the pandemic, more than a million people were admitted to hospital for obesity-related treatment in England.

Record hospitalisations should be a wake-up call. Public health authorities on both an international and national level have failed to front up to the sheer scale of the challenge. Public Health England and the World Health Organisation are both indoctrinated with interventionist tunnel vision. For them, fighting obesity is banning things, taxing them out of existence, trying to manipulate consumers with intrusive campaigns and attempting to shame them into making “better decisions”. 

Those charged with addressing public health issues are reading from the same tired hymn sheet of failed policies. They are trotting out twentieth-century ideas to deal with twenty-first-century problems and their failures have tragic consequences on an enormous scale.

The headline act in this appalling show is the government’s plan to ban junk food ads. The policy looks set to go ahead after being included in the Queen’s Speech, despite extensive campaigns calling attention to the problems with an overly intrusive approach, for the advertising industry and everyone else.

My mother, a working-class, immigrant single parent, runs a small baking business out of her kitchen. Under the mad ad ban plan, my mum posting pictures of her cakes on Instagram will become illegal. And for what? The government’s own analysis of the policy found that it will remove an average of 1.7 calories from children’s diets per day – roughly half a Smartie.

When asked about the case of a bakery with an Instagram account, the prime minister’s spokesperson was unable to offer any reassurances. A government source quoted in the Sunday Times earlier this year said: “there will be caveats – this is not aimed at small companies advertising home-made cakes online. It is aimed at the food giants.” It remains unclear how a blanket ban on a certain type of advertising can be legally targeted at some companies and not others.

The solution to the obesity crisis lies in more freedom of choice, not less. Even those evil food giants are responding to public pressure, keen to be seen making an effort in this area. McDonald’s, for instance, is providing five million hours of football training across the UK. Even Britain’s pubs play an important role, contributing more than £40 million every year to grassroots sports.

When people voice their concern en masse about a particular issue, private actors go out of their way to make themselves useful and do something about it. Countless companies are voluntarily investing in healthy lifestyle schemes or cutting back their own contributions to obesity. Tesco, for example, has laid out an ambitious plan to boost the proportion of its food sales which is made up of healthy products to 65 per cent, setting an example for the rest of the industry as the market shifts.

Attempts to centralise responses to public health crises in government and concentrate responsibility in Whitehall fail consistently. Tesco’s radical new agenda was not motivated by public health bureaucrats, but instead by demands from its own shareholders and pressure from competitors including Sainsbury’s and Marks & Spencer. While Public Health England is cracking down on Marmite ads and Instagram pictures of cupcakes, the group of people arguably doing more than anyone else to make Britain healthier are private corporate investors.

Companies and consumer choice are our allies, not our enemies, in the fight against obesity. Rather than trying to hold back the tide, let’s harness the power of the market to tackle obesity.

Originally published here.

Україну названо найменш підготовленою країною до пандемії

Рейтинг Pandemic Resilience Index 2021.

Раніше цього місяця Consumer Choice Center опублікував свій перший Індекс стійкості до пандемії з метою аналізу готовності світових систем охорони здоров’я до кризи COVID-19. Індекс розглядає 40 країн через призму наступних факторів: схвалення вакцин, драйв вакцинації, а також кількість ліжок інтенсивної терапії та темпи тестування. Україна в ньому посіла останнє місце як найменш підготовлена до пандемії країна.

Стійкість країн була оцінена як найвища, вище середнього, середня, нижче середнього та найнижча. Ізраїль та Об’єднані Арабські Емірати очолили рейтинг, в той час, як більшість країн ЄС показали середній рівень готовності. Британія та США — вище середнього.

Нова Зеландія та Україна продемонстрували найнижчу стійкість. У випадку з Новою Зеландією, її відставання можна пояснити місцем розташування та строгим закриттям кордонів. Через те, що випадків було небагато, система охорони здоров’я не стикнулась з критичним випробуванням на непохитність і гнучкість.

Натомість у випадку з Україною — причини інші. Як пострадянська держава, яка пробиває шлях до ЄС, Україна не змогла провести ефективну реформу системи охорони здоров’я. У поєднанні з корупцією, регуляторними бар’єрами для затвердження вакцин та неефективним управлінням, Україна не тільки не змогла на ранніх етапах ідентифікувати зростання рівня поширення ковіду та діяти відповідно, а й швидко адаптувати свою систему охорони здоров’я до новопосталих викликів.

Наприклад, Україні знадобилось на 84 дні більше ніж Великобританії і на більше ніж 50 днів більше ніж ЄС часу для того, щоб офіційно розпочати вакцинацію. Затримки більшою мірою є результатом недалекоглядності і відсутності антиковідної стратегії. Об’єднані Арабські Емірати, які є світовим лідером з вакцинації, розпочали перемовини з виробниками вакцин ще весною минулого року. Гірший ніж Україна за цим індикатором індексу результат має тільки Австралія, яка почала вакцинацію 25-го лютого 2021-го року, на день пізніше ніж Україна.

Боротьбу з вірусом також підриває мала підтримка вакцинації серед українського населення. Згідно з опитуванням, проведеним Національним харківським інститутом соціологічних досліджень Дослідженням, станом на грудень 2020-го року лише 21 відсоток українців хотіли вакцинуватись – 40 відсотків були проти.

Середня кількість щоденних тестів проведених в Україні на 100 тисяч населення (станом на 31 березня 2021-го року) – 0.51 – є однією з найнижчих у світі. Такий показник є у 4 рази нижчий за Британію, у 14 – за Словаччину, та у 11 – за Кіпр. Відповідно до результатів Індексу, тільки Індія та Бразилія тестують менше ніж Україна.

Стосовно кількості ліжок інтенсивної терапії, то Україна тут також на дні рейтингу. Перед початком ковіду в Україні було 4.1 ліжка на 100 тисяч населення. Для порівняння, в Польщі було 10.1, а в Росії – 8.3.

Враховуючи те, що є всі підстави очікувати набагато більше подібних пандемій у майбутньому, надзвичайно важливо задуматися про нашу здатність передбачати такі загрози, розпізнавати їх на ранніх термінах, реагувати, не вдаючись до паніки та поспішного прийняття рішень, уникати дефіциту засобів захисту, виявляти та коригувати регуляторні бар’єри та, загалом, підтримують стан готовності. Україна має багато чого повчитись в інших країн, і Індекс є яскравим свідченням того, що індійський сценарій пандемії є досить реальним для України, якщо ми не розв’яжемо фундаментальні проблеми в системі охорони здоров’я.

Originally published here.

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