Groundhog Day meets recycling economics

Also, ‘keynote listener’ is the dumbest new piece of government jargon

Yukon tire and electronics business owners must have recently felt like they were in a weird version of Bill Murray’s Groundhog Day, doomed to relive consultations about the same recycling policies again and again.

First mooted in 2016 by the previous territorial government and in the papers several times since then, the government’s proposal is for special recycling fees — often significantly higher than B.C. or Alberta, according to the industry group Tech Yukon — on tires and electronics.

Only a comedian of Bill Murray’s genius could think of organizing the consultations with government ministers as “keynote listeners,” only supposed to listen and not be spoken to by citizens, rather than having ministers present their proposals directly to citizens and hear back. However, business owners probably weren’t laughing as they realized they were more likely to have a direct conversation about their livelihoods with one of their elected representatives in the aisle of a grocery store than at a public consultation.

It is strange that government did not engage business owners more effectively from the beginning. If the objective of consultations is to produce better policy, rather than just allow officials to defend their preferred policies by claiming they consulted, then you would want to sit down and find solutions together with people who know the dynamics of their industries best.

This is all the more important in recycling economics, because the topic is complex. There are conflicting principles, and the law of unintended consequences is particularly powerful.

The proposal is that there be extra fees paid at the point of purchase on certain products that are difficult or expensive to dispose or recycle. This includes tires as well as electronics such as computers, screens and printers.

Other parts of Canada already do this. Say, for example, you need a $929.99 CyberPower Gamer Xtreme desktop computer (and who doesn’t?). If you order it from Amazon to a B.C. address, Amazon automatically adds a B.C. recycling fee of $2.25. It also adds B.C.’s provincial sales tax of $65.26 for a total of $1044.11.

Currently, if you order the same machine for Yukon delivery there is no territorial sales tax and no recycling fee. The total is just $976.49, a savings of 6.5 per cent compared to B.C. prices.

The Yukon government’s proposed fee for such a machine would be $15, or 500 per cent higher than the B.C. fee. This would bring the price up to $991.49. Since we don’t have a sales tax, this is still cheaper than the total B.C. price.

As mentioned in previous columns, the territorial government shot down its own financial advisory panel’s recommendation about a politically controversial sales tax. So, in a way, having higher e-waste recycling fees is a sly way for the government to give itself green political cover to implement a de facto sales tax on certain products (albeit one whose revenue is dedicated to recycling).

The higher Yukon recycling fees proposed will affect other products more significantly. The fee on the Gamer Xtreme desktop computer above is a small percentage of its prices, but the proposed $30 fee on some computer screens is relatively much higher. A $50 per tire fee on commercial tires will definitely encourage people in the highly competitive trucking business to shop in Alberta, where the fee for medium truck tires is $9.

There are good environmental reasons why the government doesn’t want us to just toss our old tires and toxic electronics in the garbage with our old shoes. But designing a sensible special recycling program is difficult because there can be conflicts between what policy analysts call the “design principles” involved.

First, you want the people who use the tires or electronics to pay for the full lifetime costs of their products. If people only pay for the manufacture of their products and not their safe disposal, the products will seem cheaper than they really are. In effect, people would be encouraged to use more of them.

Second, you want cost recovery. The users of the computer should pay the cost of disposing it. Otherwise, taxes on everyone else have to be higher to pay for the program. And taxes cause economic inefficiencies of their own (although in our case, most of our tax revenue comes from transfer payments so it doesn’t affect us very much).

Third, the program should generate more benefits than costs. If you create a really complicated program with unnecessary red tape, you force businesses and governments to divert people and money into administering it. That’s a waste.

Fourth, you want to support local jobs and economic development, either in the recycling industry or by not hurting other businesses who sell the products in question.

Finally, you have to think through how people will behave when faced with the new system. There can be lots of unintended consequences.

Consider how our home garbage pick-up system is designed. It violates several of the principles above. You don’t pay per bin of garbage. In fact, everyone has to pay whether they generate garbage or not. But it is a sad fact that if you charge per bin then you tend to get a lot more rogue dumping.

For tires and electronics, the internet and our proximity to B.C. and Alberta mean that people can adjust their buying behaviour. If you set the tire price a lot higher than Alberta, people will buy tires there (and still dump them in the Yukon). If they can order computer screens on the internet more cheaply from foreign vendors who don’t participate in our recycling scheme, they probably will.

I’m guessing this is why B.C. charges just $2.25 for a computer. This probably does not recover the full cost of recycling one.

The factors above make me wonder whether it might not be better overall to do the lottery model. Being in a federation can be great for small jurisdictions like us, since we can often piggyback on existing programs without incurring our own administrative costs. We don’t run our own territorial lotto, but just take part as associate members of the Western Canada Lottery Corporation.

Why not just join or copy the B.C. or Alberta models for recycling? We won’t get to have a Yukon program with its own executive director, logo and consulting budget. But we might save everyone else a lot of time and trouble, and avoid a bunch of interjurisdictional gaming of the system by people who buy tires and electronics.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.

economicsRecyclingYukonomist

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