2014 plan to close slew of rural NSLC outlets would have cost at least 129 jobs

The 2014 document at the heart of Auditor General Michael Pickup's decision to delve deeper into how the Nova Scotia Liquor Corporation is governed recommended closing 25 rural outlets and handing over liquor sales to private operators to fill the void.

According to a summary of an internal review conducted by the provincial Crown corporation, closing the 25 stores would have saved the NSLC $4.5 million a year, but would have cost at least 129 people their jobs — 50 of them full-time employees.

A report released Tuesday by Nova Scotia's auditor general said the finance minister at the time, Diana Whalen, who was responsible for the NSLC, was briefed on the plan in July 2014. Senior NSLC officials subsequently presented their assessment to cabinet.

The McNeil government did not approve the move, but the NSLC was given no formal indication of that. Pickup said it isn't clear whether the NSLC needed the green light from cabinet or if it could have made the changes itself.

"Due to the ambiguity related to retail network decision-making at NSLC, and the issues identified with policy development and strategy oversight, we will complete a more extensive audit of governance practices at NSLC," Pickup wrote in his report on NSLC operations.

An NSLC spokesperson said this week that only one location was closed.

In an 11-page NSLC document, titled Small Entrepreneur Opportunity in Rural Nova Scotia, senior managers with the corporation made the case for closing outlets, including a decline in the number and volume of purchases at rural outlets.

"In some cases, we are the only chain retailer still having a presence in these communities," noted the document, which was provided to CBC this week by the NSLC. "Other retailers in these communities are struggling to survive given the challenging business climate.

"NSLC may become the 'last retailer standing' in some of these communities."

The main recommendation, endorsed by the board of directors at the NSLC, was to turn over liquor sales in those communities to private businesses to run as "agency stores." At the time, there were already 52 agency stores in the province.

"Liquor sales by larger NSLC agencies meet or exceed sales of a number of smaller NSLC corporate stores," noted the document. "In many cases, these retailers have NSLC as one of several components that keep them viable — grocery, ready to eat food, fuel, post office, Sears depot, video."

NSLC described its existing outlets as "oversized" and "inefficient."

"Transforming retail liquor sales from a NSLC corporate store to an agency store model would help keep existing retailers in these communities viable by adding a significant number of customer visits that would translate into increased transactions and profitability for the retailer, keeping them viable and able to continue serving these communities," concluded the report.

The corporation document concluded that "transforming 25 stores having less than $2 million in annual sales would result in an estimated $4.3 million in annual on-going operating expense savings for the NSLC, net of any agency store discounts or other costs."

Those savings would be offset by $1.6 million severance costs for laying off 129 employees. Another 34 employees would be able to fill vacancies in other stores, if they were willing.

Senior managers felt the time was right for shutting down the stores, given NSLC collective agreements were due to expire in 2015.

Just 1 closed

Of the 25 outlets on the chopping block, according to NSLC spokersperson Beverley Ware, the corporation has only closed one — Joggins. 

In an email to CBC News, Ware noted outlets in Port Hood, Sheet Harbour and Dominion are budgeted for renovations this year. She also said corporation stores in New Germany, Guysborough, Bridgetown, Arichat and Chéticamp have since been relocated or renovated.

Whalen, who do did not reoffer in the 2017 provincial election, said in an email that it would be "more appropriate" for the current finance minister, Karen Casey, to answer questions about why the NSLC plan was not approved.

Gary Andrea, speaking on the Finance Department's behalf, wrote in an email: "In 2014 the NSLC put forward a plan to convert some rural stores to agency stores and that plan was not approved by government.

"Minister Casey was not minister of finance and Treasury Board in 2014, and we cannot speak to why the decision was made at that time."

In 2014, Casey was minister of education and early childhood development.