Yukonomist: Putting a price tag on slow government

Yukonomist Keith Halliday

Governments around the world have recently been forced to hand out energy rebates because an aggressive dictator invaded a neighbouring country, creating a global supply crisis in oil and gas markets.

The Yukon government, on the other hand, had to extend a $50 per cord firewood rebate because it created its own supply crisis via its woodcutting permit system.

There was much ridicule last year in Yukon policy wonk circles as the government of an area the size of France, covered in trees, managed to create a firewood shortage. And much frustration among Yukoners on budgets, who rely on wood for heat.

Now, a year later, Whitehorse taverns and social media channels are again full of stories about $500 cords of firewood being trucked in many hundreds of kilometres from British Columbia.

The laughter has turned to amazement: really, they couldn’t solve the permit problem in a whole year?

Government spokespeople have tried to deflect blame. “Harvesting opportunities for firewood continue to be available and permits continue to be issued throughout the territory. Eligible operators have not been denied a permit due to wood supply,” said a statement from the Cabinet Office.

Are they really suggesting that the permit situation is fine but the private sector somehow botched the cutting and delivery this year?

Ask your woodcutter for their side of the story. Were the permits issued late? On hillsides? Across sloughs or gullies? Close to the big market in Whitehorse? How much of the wood on offer was mature spruce or pine versus beautiful but useless trembling aspen?

The Yukon government has not issued a formal apology to Yukoners for messing up a 125-year old firewood market. But the $50 rebate is some attempt to put a price tag on what has gone wrong.

The compensation is only partial. You would have trouble finding a firewood buyer who is paying just $50 per cord more than they were a few years ago. Buyers who didn’t get a receipt are out of luck. And with a government subsidy boosting demand in a market with a supply problem, we can expect prices to go up even more because of the rebate.

It is also remarkable that the rebate applies to B.C. firewood, as long as it is laundered through a Yukon vendor. We are, in effect, recycling our transfer payment to support jobs in Northern B.C.

Administering the program will also have a cost. Ads must be run. Website pages designed. Management board guidelines read, debated and complied with. Forms with crumpled and illegible receipts processed. Payments issued.

Has the government distracted the same officials in the Department of Firewood who are supposed to be working on permits by giving them the additional job of organizing a political damage-control rebate program?

The episode could be a fascinating case study on “clock speed” for the governance and business programs at Yukon University.

The traditional lenses for analyzing government programs focus on policy and organization. What are the policy objectives that best balance the needs of all the stakeholders? Which policy instruments should be used, from regulation through to incentives? How should the dozens of agencies across the Yukon’s four levels of government be organized to implement?

However, you can get all these right and still fail. Because you are too slow.

Management gurus also look at speed. Inspired by a jet fighter pilot from the Korean War, they use a concept called the OODA loop.

OODA is short for Observing the situation, Orienting yourself to the key facts and choices, Deciding what to do and then Acting.

And then — and this is where speed comes in — repeating the loop again and again as quickly as possible.

A jet fighter pilot with a year-long policy review process is a dead jet fighter pilot.

You can see traces of slow and ineffective OODA loops in the firewood debacle. Government firewood pilots did not observe two years ago they were flying their plane straight at Shortage Mountain. Then a year ago they observed — or had it observed to them by enraged stakeholders — a shortage, and decided to engage in a lengthy process to issue more permits.

But because they are running a year-long OODA cycle, they did not observe until now — too late — that their permit actions were insufficient. They will do another loop over the winter for next year’s season.

What would a faster OODA loop in firewood look like? It would include things like listening to woodcutters earlier and more often, monitoring permit volumes and prices throughout the year, and deciding to release more or different land if there’s a shortage emerging. And all on multiple OODA cycles that are measured in weeks not years.

Maybe some year in the future there will be enough permits, at the right time, on the right kind of wood terrain. But getting there with such slow clock speed will be needlessly painful for Yukoners.

In the meantime, firewood prices are stressing Yukon family budgets already under assault by inflation. Carbon is flying into the sky as trucks drive spruce trees from B.C. to the Yukon. And people thinking of biomass heat as a new line of economic activity in the Yukon are having second thoughts.

Jet fighter pilots make jokes about “desk jockeys.” But if you are going to ride a desk in government, you might as well try to make it a fast one.

Keith Halliday is a Yukon economist, author of the Aurore of the Yukon youth adventure novels and co-host of the Klondike Gold Rush History podcast. He is a Ma Murray award-winner for best columnist.