Beer czar dismisses ‘fear-mongering’ over cost of breaking contract

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Beer czar dismisses ‘fear-mongering’ over cost of breaking contract


Premier Doug Ford’s booze adviser says it’s “fear-mongering” to suggest taxpayers could pay up to $1 billion to get beer sold in corner stores.

Ken Hughes, the former Alberta cabinet minister hired for $1,000 a day to advise Ford on expanding sales, expressed outrage at a Star story outlining the province’s potential exposure if it breaks a 10-year agreement signed with the Beer Store in 2015.

Hughes blasted industry sources who warned the tab for the provincial treasury could easily top $1 billion in compensation to the brewers.

That would be to compensate for $100 million already spent on infrastructure improvements, lost profits during a two-year price freeze in the contract, and “descaling costs” if the Beer Store is forced to close some of its 450 outlets and lay off employees due to a decrease in business.

“I would say this is irresponsible, this is fear-mongering, this is trying to create chaos …,” Hughes told CP24’s Nathan Downer on Wednesday.

In an interview later with the Star, Hughes noted the province has “tools in our tool kit” to get the brewers to agree to revised terms that would allow expanded beer and wine sales.

While he declined to discuss what those measures might be, he said it was “premature” and “irresponsible” to discuss potential compensation to the Beer Store for cancelling the 2015 deal.

Asked about the $100 million the brewers were mandated to spend on improving their stores, Hughes suggested they would probably have made those investments anyway in the normal course of business.

Still, he added, “the brewers could certainly do very well” out of any changes to the contract.

“There’s tremendous opportunity here.”

The former politician stressed “there’s no specific number” for compensation if the 2015 master framework agreement signed by the previous Liberal government and the brewers is broken.

But that complex 10-year deal, which allowed beer sales in 450 of the province’s 1,500 supermarkets, does spell out potential liabilities for cancelling the contract.

“An arbitration tribunal … shall treat all obligations in this agreement … as binding and enforceable against the province despite its status as the Crown, even where the alleged breach results from a change in legislation or public policy,” the 27-page accord states.

“Such an award shall be calculated on the basis of the normal principles of damages for breach of contract.”

That suggests Queen’s Park could be on the hook for hundreds of millions in severance payments, pension liabilities, and lease termination costs if the Beer Store, which employs 7,000 unionized workers, is forced to scale back operations.

In a statement, the retailer, which is owned by Labatt, Molson, Sleeman and about 30 smaller Ontario brewers, would only confirm it is in talks “aimed at reaching a mutually agreeable amendment to the (master framework agreement) to improve customer convenience and choice.”

Hughes was hired in March at a rate of $1,000 a day, to a maximum of $200,000 over his one-year contract, plus expenses.

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie





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