He said he wouldn't cut taxes on alcohol, but he would consider selling part or all of the LCBO, which brought in $1.65 billion to the province last year, excluding taxes.
"I think we need to be practical and thoughtful, whether that's a partial sale of LCBO stores, a full sale, allowing the employees in to bid and run them as well, or franchises," Hudak said.
"I think all these options are valid. I'd like to hear what Ontarians have to say about that, but I'm not going to build new stores, and I think it is time to have LCBO stores go into private hands."
Allowing beer to be sold in convenience and grocery stores would also end the Beer Store's monopoly, he said.
Hudak's proposal for the LCBO is among several trial balloons the Tory leader is floating, which also include having the province get out of the gambling business. They're not official party policy, however.
Rather than spending money on gambling and alcohol, the government should concentrate on core services like health care and education, he argued.
"When we have people waiting far too long for an MRI scan ... should we spend another $100 million in building fancy new government-run stores?" Hudak said.
Finance Minister Dwight Duncan denounced the proposal, saying the government looked at selling the LCBO and the Ontario Lottery and Gaming Corp. years ago and decided against it.
The province may reap a few billion dollars up front by selling the two Crown corporations, but they generate billions every year that help pay for schools and hospitals, he said.
Once sold, they would also have to pay tax to the federal government, which reduces the value of the sale price, Duncan added.
"We're seeing a lot of recycled ideas coming from Hudak's PCs," he said in a statement.
"They campaigned on privatization in '95 and the only thing they really sold was Highway 407 and that was a bad deal for Ontario."
It's an old proposal that previous Ontario governments have rejected because it needs those profits to support public services, said NDP critic Peter Tabuns.
"It's an idea that's both stirred and shaken," he said.
But Hudak rejected their claim that selling any part of the LCBO would deprive the province — which is facing a $14.4-billion deficit this year — of much-needed cash. Revenues would actually increase because there would be more choices open for consumers, he said.
Times have changed and he won't back down on the idea this time around, Hudak said. People want to buy alcohol in corner and grocery stores.
Hudak pointed out that Ontario's auditor general has criticized the LCBO — one of the biggest alcohol retailers in the world — for failing to use its massive buying power to negotiate lower wholesale prices.
Sometimes, if suppliers submit significantly lower quotes than the LCBO expects, it will ask the suppliers to raise their wholesale price, the auditor general found in a report released last year.
"Why are we obsessed with the government that has to be the one to hand over the vodka bottle to you or the six-pack of beer?" Hudak said.
Other Canadian and U.S. jurisdictions such as Alberta, British Columbia, West Virginia and Iowa allow the private sector to sell booze, he said.
"You could drive out of this province in any direction you wanted to go to, and you'd find more choice and more competition in privately run stores," he said. "It's time we did that in Ontario too."
But privatized alcohol sales can also result in increased access to alcohol, which can lead to more consumption and alcohol-related problems, said Mothers Against Drunk Driving Canada.
"Privatized alcohol sales are presented as an issue of convenience for customers, or a way for government to reduce costs, but what is ignored in these discussions are the negative implications for public health and safety," CEO Andrew Murie said in a release.