British Columbia’s government will dump plans to privatize its liquor warehousing and distribution operations, as part of a tentative deal for two years of labour peace with provincial employees.

Provincial Finance Minister Michael de Jong on Friday announced a tentative deal for a new contract that would cover about 26,000 members of the B.C. Government and Service Employees’ Union (BCGEU).

The two-year labour agreement, which still must be ratified through a member vote, will also provide for "modest" wage hikes to be funded from savings within current department budgets, the province said Friday.

"As part of the agreement, the negotiated request for proposal (NRFP) process for the privatization of liquor distribution was cancelled," the province said.

"Both sides agree the move (to cancel the NRFP process) was needed to get the deal done," the BCGEU said in statements Friday. "The (Liquor Distribution Branch, or LDB) is an important source of provincial revenue and will remain intact."

The province’s plans, first announced in February, had gone only so far as a short list, drawn up in July, of four proposals, submitted by ContainerWorld Forwarding Services, Exel Canada, Kuehne + Nagel and Metro Supply Chain Group, out of six submitted proposals in all.

The province’s NRFP evaluation committee was then to see which of the proposals "best meets government’s objectives."

"Lower overall costs"

However, the province’s plan didn’t fully commit it to privatization unless the committee was to find in any of those proposals that "a better service delivery model" would result. "Any new system would have to demonstrate itself to be more effective and efficient, and provide lower overall costs to government."

If the committee had gone on to find such a proposal, a services agreement was to be negotiated with the successful company by March next year.

The original RFP sought a private owner and operator for the province’s Crown-owned and -operated LDB warehouses at Vancouver and Kamloops.

From privatizing the LDB’s distribution operations, the province expected to "realize a long-term capital gain, and create an opportunity for the private sector to find more efficient ways to distribute liquor in B.C.," the government said in February.

About 55 per cent of the liquor sold in the province moves through the two LDB warehouses, which employ about 400 unionized staff. The other 45 per cent is already handled through private distributors.

The RFP was not to include the province’s control over liquor pricing, nor the LDB’s retail operations, which in February included 176 provincially-owned BC Liquor Stores outlets and 21 BC Liquor Stores Signature shops.

The LDB also distributes to over 220 privately-owned "rural agency" stores in smaller communities.

"Central"

The BCGEU had ripped the government’s plan for months, setting up an online campaign stating that the public "has not been consulted" and that the province hadn’t presented a business case for the move.

"Last year alone the LDB contributed $890 million to help pay for public services such as health, education, highways and seniors care," the union said.

"The mix of rural agency stores, privately-operated neighbourhood stores and government stores with consistent province-wide pricing, all supported by central LDB distribution, works well for consumers and all British Columbians."

The tentative deal announced Friday also gives BCGEU members includes wage hikes of one per cent retroactive to April 1, 2012 and Aug. 15, 2012, and again in April 2013 and December 2013.

The deal also "renews important employment security protection for another two years," the union said.

Related story:
B.C. to privatize liquor distribution operations, Feb. 22, 2012