Even before taking office, president-elect Barack Obama has brought a new word into the political lexicon: “shovel-ready.”
Though he has less executive experience than Alaska governor Sarah Palin, or her admirer Dennis Fentie, he has quickly realized what many more grizzled political leaders have not: that lower interest rates and bank recapitalizations are not enough to make a dent in the global economic crisis.
Major new government spending — a fiscal stimulus of possibly unprecedented proportions — may be needed. Obama recently announced a plan to create 2.5 million jobs fixing bridges, renovating schools and improving internet infrastructure.
Obama already has his economic team in place and they are scouring America for things for the government to spend money on. Clever local officials from Boston to San Diego are making sure their favourite projects are “shovel-ready”; that is, planned, approved and ready to be showered with federal cash.
The next president has also made it clear that he wants this spending to be real investments in the future. “We won’t do it the old Washington way. We won’t just throw money at the problem. We’ll measure progress by the reforms we make and the results we achieve — by the jobs we create, by the energy we save, by whether America is more competitive in the world,” he said.
Sooner or later, when our politicians in Ottawa run out of laughing gas and get back to business, this thinking will come to Canada.
Already all the national party leaders are talking about a fiscal stimulus, even if the scale of their ambition remains small compared to Obama’s. Fortunately their staff — likely already surfing obama.com fantasizing about having a different boss — will soon be downloading details of the next president’s plan.
Then the race will be on in Canada for shovel-ready projects of our own.
With that in mind, let’s have a look at the potential projects in the Yukon. To put it in perspective, the Yukon government has about $140 million in the bank it could spend on projects. But you have to reduce this by the $36 million that Premier Fentie got frozen in asset-backed commercial paper. Plus the government is running a roughly $20-million cash deficit this year and they are likely to keep burning cash on day-to-day expenses for the next few years. In fact, it may get worse if the transfer payment formula turns against them due to recession Outside.
But they still have $50 to 70 million or more to spend stimulating the economy. Ottawa will likely contribute more. The International Monetary Fund thinks the stimulus may have to be over 2 per cent of gross domestic product. Given that the Yukon is roughly 0.1 per cent of Canada’s economy, we might expect about $20 million from a program of that size. But it depends on how ready we are to ask for it.
Competitor No. 1 is FH Collins high school. While Obama plans to get the plan to create 2.5 million jobs in place by January, Department of Education officials revealed at FH Collins school council last week that they have no plan in place to kick off the design process or be shovel-ready by any particular date. Even their plan to create a plan was worryingly vague.
If they are smart, they will issue the request for proposals next week for architects to start the design phase. That way they have a chance of being shovel-ready in 2009 and getting in the queue for the $40 million they likely need before the money runs out.
Obama, after all, highlighted the importance of allocating significant new money to educational infrastructure.
And if they are extra clever, they will emphasize the French immersion program at the school to attract even more federal money.
Another is the Kwanlin Dun cultural centre, which could be a gem on Whitehorse’s waterfront.
It is not shovel-ready either, but a concerted effort by the First Nation to finalize a design concept in 2009 could make it a contender. We don’t really know, but pencil in a number from $5-15 million.
Next is the Watson Lake hospital, which could cost $30 million or more.
It’s not clear that Watson Lake needs a new hospital of that size or that building one would be the best way to spend $30 million. But it is in Premier Fentie’s hometown and the government has been working on its design (for many years in fact). So this project could be close to shovel-ready.
The Whitehorse hospital, it is rumoured, is thinking about asking for a new emergency room. While it might make more sense just to hire more nurses, politicians do like opening new emergency rooms. The hospital also has an active CEO and engaged private sector partners. This project could move fast up the list.
On the private sector side, Northwestel executives probably read Obama’s speech with interest.
Traditional politicians think of “infrastructure” as bridges and jails.
Obama explicitly identified broadband infrastructure and highlighted the need to improve America’s productivity.
This is a great excuse for Northwestel to dust off its plans to finish the fibre optic cable link between Whitehorse and the rest of the world, currently held hostage by the tough terrain and goat-filled parks around Muncho Lake.
At a rough estimate of $80,000 per kilometre and given the size of the fibre gap, this project might cost roughly $10-20 million.
The government spent millions over several years studying the Alaska-to-Edmonton railway and no private sector investors have stumped up the billions required.
Now they could try supporting 21st-century infrastructure instead of rail.
Finally, there is electricity generation.
Yukon Energy or a First Nation — as in Atlin — could build a new dam. This could cost anything from $2-3 million for a small micro-hydro project to upwards of $100 million for a giant dam.
There would be many benefits besides immediate job creation.
Cheap, stable power could allow electrical heat pumps to replace much of our home and industrial heating infrastructure, significantly reducing both our reliance on expensive fossil fuels and our greenhouse gas emissions.
It could also create lots of locally accessible jobs if the project were combined with a program to retrofit Yukon homes with heat pumps.
But while Yukon Energy already has a list of high-potential dam sites, they would need immediate support from the Yukon government to start the lengthy regulatory and environmental processes.
So what will happen next?
It is now up to our elected leaders, senior officials and phone and electrical company executives to get their plans together and see whose shovels will hit the dirt first.
But if they don’t hurry, we may find that the government has panicked and spent the money on quick, easy and senseless projects like paving the Robert Campbell Highway or making the long-term vehicle storage lot at the airport even bigger.
Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels. His most
recent book Yukon River Ghost
appeared in June.