Ontario’s FAO to investigate Ford government’s alcohol expansion

The Ford government’s decision to expand alcohol sales to convenience stores and gas stations at a cost to taxpayers is now under the official microscope, 680News Radio has learned.

The Financial Accountability Office of Ontario (FAO), the province’s independent financial watchdog, is conducting a value-for-money audit of the expedited expansion to assess the potential financial costs.

When the Ford government expanded sales of beer, wine, cider, and ready-to-drink cocktails into Ontario convenience stores and gas stations on Sept. 5, it did so ahead of schedule.

A master framework agreement (MFA) signed under the Liberal government in 2015 gave the privately run Beer Store exclusive rights to sell 12—and 24-packs of beer. It was set to expire in 2026, but the government’s expedited plan involves an “early implementation agreement” with the beer retailer that will see the province pay the company up to $225 million.

The FAO report will estimate the financial costs and benefits of accelerated expansion “and compare these fiscal impacts to a scenario where the Province expanded alcohol access at the expiration of the MFA on Dec. 31, 2025.”

When asked why taxpayers should be on the hook, finance minister Peter Bethlenfalvy told 680News Radio in a Sept. 4 interview that “there’s always going to be costs,” but added that “every nickel, we’re going to make sure it’s accounted for.”

The government contends the money being paid to the Beer Store will help protect jobs.

Lost LCBO revenue

The FAO says it will also examine the impact the expansion of alcohol sales may have on LCBO revenues.

The LCBO brings in approximately $2.5 billion for the Ontario government each year, about 80 per cent of which results from sales at LCBO retail stores.

In a July 8 interview with 680News Radio, Bethlenfalvy responded, “Who knows? ” when asked how the expansion of alcohol in corner stores and gas stations will affect this revenue stream.

“It depends on how consumer behaviour is… we’ll see how everything plays out, and then I’ll let you know.” The finance minister’s office now contends that “revenues will grow above current levels.”

The Ontario Liberals contend the accelerated expansion of alcohol could cost upwards of $1 billion.

“Given the Finance Minister has admitted he doesn’t know the true costs of this boozedoggle, he should want to support the FAO getting to the bottom of how much this scheme will cost Ontario taxpayers,” said Liberal Leader Bonnie Crombie.

The FAO said it will also examine “Foregone LCBO revenue from the wholesale discount to retailers, the Cost of service fees paid to the LCBO and rebates paid to TBS” as well as tax revenue changes and alcohol license fees.

Report likely early next year

The FAO plans to complete its investigation in early 2025 but warns, “There are risks to meeting this timeline. The main risk is access to information.

The FAO must receive timely information from the Province to complete the project, and delays in receiving information could affect the project timeline.”

Crombie has called on the Ford government to cooperate fully with the investigation and ensure “the FAO receives the information he needs to complete his work.”

Responding to news of the FAO investigation, a spokesperson for the finance minister told 680 NewsRadio, “History has shown that LCBO revenues have continued to grow, year over year, even as successive governments have expanded alcohol sales to new retail stores and allowed bars and restaurants to sell alcohol with take-out and delivery. As LCBO assumes this expanded wholesaling role, we are confident those revenues will grow above current levels.”