Goodbye, Raven Recycling

Thanks one more time to Minister Brad Cathers. He can always be counted upon to generate a controversy to write about. Recently it was cancelling a big affordable housing program.

Thanks one more time to Minister Brad Cathers. He can always be counted upon to generate a controversy to write about. Recently it was cancelling a big affordable housing program. This time it’s the Raven Recycling closure.

I’m sure the NDP and Liberal caucuses are also grateful. For some time Cathers has been winning the Most Valuable MLA award in terms of whipping up support for the opposition.

The same goes for the mayor and city council. When Raven made its announcement and Whitehorse citizens dropped their High Density Polyethylene yogurt tubs in alarm, it looked likely that voters would blame the city and YTG equally. But then Cathers made a few public remarks, selflessly focusing residents’ ire on himself and the Yukon Party.

But that’s enough about Cathers and his generous contributions to our community. What is one to think about Raven closing its recycling program for tin, plastic, paper, cardboard, glass, Tetra Paks and styrofoam?

Is Raven a loss-making enterprise subsidized by the government and unfairly competing with the private sector? (Never mind for a moment that its “private sector” competitor, P&M Recycling, also receives government money and was given a $200,000 machine so that your High Density Polyethylene yogurt tubs heat their building instead of getting recycled into pens or picnic tables. This improves their bottom line by a tidy $18,000 a year.)

Or is Raven a lean community enterprise that provides an important public service more efficiently than a government department could do?

Raven’s revenue in its 2014 fiscal year was $3.1 million, with a bit more than half from government “diversion credits” it gets for reducing the amount of garbage headed to the dump. It also gets about a tenth of its income from bottle deposits.

About half of Raven’s revenue is generated by Raven itself. Its expenses were $3.0 million. It had a modest profit, and its cash flow from operations was positive. It invested in its business via property, plant and equipment and paid back some long-term debt. It’s net cash burn for the year was $5,734 in 2014, versus $27,011 the year before.

An arch-capitalist shareholder – say, Burns from the Simpsons – would be upset about this. Raven’s return on capital will never make it a hot IPO.

But if you think about Raven as a public service facility, it looks pretty darn good. Compare it to other public service facilities in town like, for example, the Canada Games Centre and the city dump. Have the Games Centre or the dump ever earned an operating surplus, or had own revenues make up half their revenue? Have they ever even been close?

The people I know who are involved at Raven either volunteer or earn modest hourly rates. I was there yesterday and they were working hard. You almost had to shout to make your voice heard over the noise of all the bottles, forklifts and clattering beer cans.

Many people talk like the difference between government and private sector is black and white. But, in reality, both left and right wing governments around the world have successfully experimented with ways to use non-government organizations to deliver public services. Your doctor probably doesn’t work in a government office, for example, and many governments around the world use non-government organizations to deliver important social services such as public health programs or addictions counseling.

Our governments seem less willing or able to manage innovative programs like this, which can often deliver valuable public programs more creatively or cheaply than government can itself. From an outside point of view, both the Yukon and City governments appear to have been bulking up their own operations significantly in recent years but being much more stingy with their partners. Raven claims that the diversion credits from the City of Whitehorse and territorial governments cover only half the cost of processing non-refundables like plastic and paper.

The Yukon government announced a review of the rates for bottle deposits, which haven’t gone up in literally decades. This is a day late and a dollar short or, as Raven put it more politely, “changes are not expected to be implemented for at least 12 months and we cannot hang on that long.” And bottle deposit rates don’t fix the key problem that diversion credits only cover half the cost of processing non-refundables.

Starving Raven into shutting down its non-refundables business doesn’t seem like a good idea to me, especially when the territory is awash in record transfer payments and the city has raised taxes for 10 years in a row and has record cash in the bank.

And if they still don’t like increasing funding for Raven, they should think about how expensive and politically problematic it will be to expand or replace the dump when it fills up with unrecycled recyclables. P&M told the media last week it can’t handle Raven’s volume of non-refundables.

Given how much sweat and tears the Raven people have invested in the business over the last 22 years, they have been remarkably restrained in their lobbying. A handout at the Raven desk simply says “Help us re-open soon by contacting Minister Brad Cathers (667-5806) and Mayor Dan Curtis (668-8626). Let them know you want this service back!”

It’s a far cry from the noisy campaign local realtors ran recently against the affordable housing program. I used to live in Brussels, where protesting farmers once made their point by dumping so much liquid manure in front of the airport terminal that it had to shut down. Our leaders are lucky that Raven didn’t give out the addresses of their offices and suggest citizens take their yogurt tubs there.

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