Chamber: Cheers to letting the best beer win

Free the beer?

Perhaps the issue closest to people’s hearts is that of Alberta’s beer taxes. In an attempt to promote growth in the craft beer industry, the Government of Alberta raised the liquor markup for all brewers to $1.25 per litre. Then they instituted the Alberta Small Brewers Development (ABSD) Program which is essentially a grant system for Alberta brewers with annual production of 10,256,000 litres or less.

While the NDP government is very quick to take credit for the veritable ‘boom’ of craft breweries in Alberta, it is important to remember that in 2013 the then Progressive Conservative government lifted the minimum production requirement of 500,000 litres per year for breweries. While the protectionist increase in beer taxes and the grant unquestionably aided growth in the industry, it would not have been possible if not for the elimination of the minimum production limit.

The ABSD was introduced as a way to help diversify our economy by promoting growth in the craft beer industry. Unfortunately, the program was found to promote Alberta brewers at the expense of their provincial counterparts. In 2017 there was a panel ruling the policy violated Canada’s Agreement on Internal Trade (AIT). The Alberta Government appealed that decision and in June of 2018 the same panel ruled the Government must repeal or amend the policy within six months. On June 20th, a judge ordered the Alberta government to pay a total of $2.1 million to Saskatchewan-based Great Western Brewing Company and Ontario based Steam Whistle Brewing, finding the ABSD to violate the constitution that states that “All Articles of the Growth, Produce, or Manufacture of any one of the Provinces shall, from and after the Union, be admitted free into each of the other Provinces.”

The policy acts in a distortionary manner by essentially acting as a subsidy while defending brewers from competitive pressures. CEO of Great Western Brewing in Saskatchewan had this to say about the ABSD: “It’s our largest province, it’s our number one invest to grow province, so this change that took place last year has had a significant impact on the business. Our future viability is at risk, so we had no choice but to launch this legal challenge.” He went on to say the policy would increase the cost of a case of some beers by upwards of seven dollars.

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Fortunately, and except the brief ban on Alberta licence plates, our eastern neighbour chose not to retaliate. However, Saskatchewan’s Trade and Export Development Minister released a statement urging the Alberta government to comply, “ensuring that brewers from our province and the rest of Canada can compete fairly with Alberta-based brewers.”

At the heart of this issue are the concepts of free-trade and free-market competition versus government intervention. The debate around the grant becomes especially significant in contrast to President Trump’s war on trade agreements and the escalating series of tariffs being levied upon us by our closest trading partner that are already costing Canadian businesses and consumers.

Time again free markets and free trade have shown to improve economic productivity while increasing consumer choice and reduced prices. In reaction to the panel’s ruling, Charlie Bredo, co-founder of Troubled Monk Brewery said “level the playing field, may the best beer win.”

In 2016 the Standing Senate Committee on Banking, Trade and Commerce found that ‘mind-boggling’ differences in provincial regulations cost the economy up to $130 billion per year in lost trade opportunities. Two years later the same barriers and even some new ones to interprovincial trade still exist and our provincial and federal leaders seemingly prefer to have companies go to court rather than take proactive steps to alleviate them. Perhaps the most unfortunate part of the entire process is the inevitable financial strain and bankruptcy of breweries that were only viable thanks to the protectionist tax and production grant that has been ruled unconstitutional.

NOTE: The views expressed in this column do not necessarily represent those of rdnewsNOW or the Jim Pattison Broadcast Group. Column suggestions and letters to the editor can be sent to news@rdnewsNOW.com.