Smothering a problem with money

The $200-million proposal to add twin lanes and other improvements along the Alaska Highway from the Carcross cutoff to the Mayo road jumps the shark, even by the Yukon government's standards. 

The $200-million proposal to add twin lanes and other improvements along the Alaska Highway from the Carcross cutoff to the Mayo road jumps the shark, even by the Yukon government’s standards.

Yes, Whitehorse traffic is occasionally annoying. But let’s ask a few tough questions before we blow a whopping $200 million.

The problem is not hours of stop-and-go traffic crippling our economy. Consider an example quote from the highway study, which alone cost around half a million bucks: “Based on 2011 data, motorists between Robert Service Way and Kathleen Road currently spend between 50 per cent to 80 per cent of their time following another vehicle during peak hours. Our goal is to reduce that to keep that below 65 per cent over the long term.”

So the problem is not stop-and-go traffic, but instead that drivers are inconvenienced by having to slow down because other people are on the road in front of them. By this standard, I would estimate that approximately 100 per cent of major roads in Vancouver, Seattle or any other city you could name would need to have a lane added too.

I don’t think I have ever heard a Whitehorse businessperson say that Alaska Highway traffic was one of their top three business problems, hurting their ability to expand and create jobs. Or even one of their top 10 problems. Have any start-ups not chosen Whitehorse as a location because commuting from Wolf Creek was too nightmarish?

And, even if we assume this is a major problem we need to solve, let’s look at other options. How about offering free vehicle registration, plus maybe a few bucks on top, for Yukoners who are willing to give up their God-given right to drive on the Alaska Highway at peak hours? That would get some cars off the road for much less than $200 million.

And unlike Seattle or Vancouver, the government here directly employs a third or more of the workforce. They could easily look up which departments have a lot of employees living in the capital city’s north or south ends, and get those departments to stagger their working hours.

Or there’s the toll idea, always suggested by economists when there is a scarce resource (i.e., road space at peak hour) to be allocated. My hypothesis is that a one-dollar peak-hour toll on the Alaska highway would solve the traffic problem overnight. Remember, this is the same government that brought in parking fees for the overcrowded airport, ending another one of Yukoners’ God-given rights – to store our vehicles for the winter at the airport while vacationing in Hawaii.

The government should try applying leadership or clever policy fixes before resorting to smothering the problem with money.

Don’t get me wrong about investing in productive infrastructure. The White Pass railway transformed the Yukon interior. The construction of the Alaska Highway was another step-change improvement. Shipping goods to the Yukon became much cheaper and took days instead of weeks.

But twinning the Alaska Highway is well along the curve of diminishing returns. It will not allow, for example, the iron ore of Crestview to be combined with the coal of Mary Lake to create a new steel industry. Nor will it allow the car-part factories of Porter Creek to feed their output seamlessly into the just-in-time supply chain of a major auto manufacturer.

Reducing the Edmonton-Whitehorse shipping time from 24 hours to 23 hours and 56 minutes isn’t really in the same league.

The economic concept at play here is “opportunity cost.” If we had infinite money, it would indeed be convenient to cut commuting times. The Riverdale bridge could also be twinned, with ATV lanes and tracked ski lanes added too. I personally would like to see a high-speed train from Whitehorse to Dawson.

But the government should look harder to find more productive investments for $200 million. How about that second fibre optic cable? Alaska Power and Telephone just announced it is laying undersea fibre to Skagway. The Yukon government should take $10-20 million of its twin-lane pile of money and immediately put out a tender for someone to build and operate that second link. Cheaper and more reliable Internet, unlike the twin-lane plan, would open up new opportunities for business and jobs in the Yukon. It would also put more downward pressure on Internet prices, benefiting a much larger number of Yukoners than the twin-lane scheme.

And what about power? We all saw our power bills go up substantially in recent years, and we are running out of cheap legacy hydro power. How about taking $100 million of the twin-lane money and putting out a call for proposals from First Nations investment corporations and other businesses for renewable energy projects? I would much rather have tens of millions of government money buy me some micro hydro or wind generation assets that would feed power into the grid for 50 years, compared to paving extra road lanes that will sit unused for 23 of 24 hours.

Comparing government investment in electricity generation versus highway paving projects highlights something strange about the way we do things here. Investments in power generation by Yukon Energy go through a rigorous business case process with utility regulators, and the investments are eventually recovered from ratepayers via their monthly power bills. Paving projects do not face the same scrutiny, and are fully paid for by the government.

Note that if the government paid the full cost of a power project, like it does for a paving project, then this investment would not have to be recovered from ratepayers through their electricity bills. In effect, it is “free” power flowing into the system to the long-term benefit of Yukoners.

You may have other ideas about how the Yukon could spend $200 million. I suggest you take advantage of the current consultations on the twin-lane project to send them in to the cabinet.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’sadventure novels. You can follow him on Channel 9’s Yukonomist show or Twitter @hallidaykeith