PART I

QUESTION 1 (60 MARKS)

Read the article below, then respond to the questions following the article. Your
responses must make explicit reference to any relevant course material (concepts,
frameworks etc.).

Ontario government still wants to privatize the LCBO 1

The Liquor Control Board of Ontario (LCBO) may soon be privatized, despite repeated
promises to the contrary by the province's Liberal government, says the union
representing LCBO employees.

The LCBO generated record sales of $3.3 billion in the last fiscal year, resulting in $1.04-
billion in profits for Ontario taxpayers. The agency is often described as the single most
profitable liquor retailer in the world. Private corporations have been lobbying for
decades to purchase the LCBO.

"Unfortunately the government is still considering privatization," says John Coones,

president of the Ontario Liquor Boards Employees' Union (OLBEU/NUPGE). It doesnt
seem to make any difference which government is elected to power, they all seem to be
willing to give up high annual profits and social responsibility for a one time infusion of
money," Coones adds.

It has been estimated that selling the LCBO could net a profit of approximately $10
billion, equal to roughly a decade of profits at current levels. But selling it off would
mean giving up untold billions more in future profits, and leaving taxpayers to fill the
gap.

"In spite of the promises made by Dalton McGuinty regarding privatization and the
LCBO prior to his (2003) election, the Liberal government is no different than the (Mike)
Harris government, except for the fact that Harris came right out and said what he was
going to do while the Liberals try to do it all through the back door," the OLBEU leader
said.

Coones also questioned the sincerity of Joe Cordiano, the minister of Economic
Development and Trade. "While (Cordiano) stated that he wanted the OLBEU to have
more information and more input into the direction and the operation of the LCBO, we
have heard very little from the government or the LCBO," Coones said.

"We asked the government to allow our union (OLBEU) to be represented on the LCBO
Board of Directors and while he said that was something he would consider, there has

1 Source: http://www.nupge.ca/news_2004/n26no04a.ht, November 26, 2004

never been anything done about it. Privatization is the original Never Ending Story."
Coones added that OLBEU members should be contacting their local political leaders in
order to "vigorously oppose" LCBO privatization.

Case/Article Questions

Based on the article above, respond to the following questions. Your responses must
make explicit reference to any relevant course material (concepts, frameworks etc.
from the lectures and/or text).

1. a. Discuss the potential advantages (reasons for) privatizing the LCBO and the
potential challenges and risks involved. (15 marks).
b. In what way would deregulation also need to be considered in the event that
LCBO is
privatized. Explain and make reference to one course illustration on that issue (10
marks)
(total 25 marks)

2. It is unethical for the government to allow the LCBO to be privatized.

Support that statement by applying end-point ethics and rules ethics (10 marks)

Refute that statement applying end-point ethics and rules ethics (10 marks) (ie argue
that it is ethical to privatize).
(total 20 marks)

3. This article opposes privatization. This article was written from a public service
employee standpoint. These individuals are resistant to changing the LCBO from a
government owned organization to a privately owned organization.

Assuming this above statement is correct, discuss sources of resistance to change and
how such resistance could be dealt with through: double loop (versus single loop
learning), and paradigm shifts. Make sure you use this LCBO example to illustrate
your points. (15 marks)