Roads Aren’t a Good Investment

Members of the Priorities and Planning Committee met in Behchoko, and met with Tlicho Government leadership.

Today the federal and territorial governments announced their plan to spend tens of millions of tax-payer dollars on a 97 kilometre all-season road from Highway 3 to Whati. Ottawa will pay up to 25 per cent and the territorial government will pay the balance of the estimated $150 million in a public-private partnership. I realize that Chief Alfonz Nitsiza and the Tlicho Government support this road and believe that it will do great things for the community, but I think they have been sold a bill of goods.

First, significant economic activity related to the road will only come if and when Fortune Minerals develops its NICO deposit located 50 kilometres northwest of Whati. One mining industry veteran described the mining project to me last week as “sub-economic” meaning  that while its shares are trading at 14 cents each (on the afternoon of the announcement),  the prospect of raising the $589 million required for development is dim.

Without the mine, the road is just another short-term make work project. The economic lift of road construction will be intense. There will be dozens of jobs available over the four-year construction period. If Tlicho companies partner with a southern contractor to obtain the P3 contract, Tlicho residents may be the ones who get these jobs. But after construction, only a handful of people will be required to provide ongoing maintenance. Government is perpetuating the boom and bust economy by building this road, and not investing in sustainability.

The GNWT’s investment in this project is $6.7 million dollars this fiscal year and next to cover start up costs. What could that money buy instead? For a start, it could buy at least dozen houses in a community that has one of the territories’ highest numbers of houses that are overcrowded or in need of major repairs. Or it could buy The Tlicho Community Services Agency a reprieve on having to making cuts to schools in the region in order to help government pay for the implementation of junior kindergarten. Or it could buy a greater investment in education at all grade levels to bring Whati’s graduation rate up from 43 per cent to the territorial average of 73 per cent (2014 numbers). Or establish an Aurora College learning centre. Whati also needs a half million dollar upgrade to its sewage lagoon.

The GNWT assures us that the road will reduce the cost of living in Whati. Would investment in hydro-electric power generation have the same effect if NTPC customers didn’t have to pay for diesel generation? About ten years ago, there was a huge effort to develop a community-based plan for mini hydro on the La Martre River near Whati.  This development would get the community off diesel for ever.   And when people drive to Yellowknife regularly to shop, will the cost of the vehicles and gas be offset by the savings on goods they buy at the big box stores?

Yesterday, Chief Alfonz Nitsiza told the committee of regular MLAs that the community expects challenges from the road as well as the benefits access will bring. I encourage him to talk to other small communities that have year-round road access to assess what those benefits are. Fort Resolution is a community of the same size, and it’s on a road. Its employment rate is 46 per cent while in Whati it’s 40 per cent. Its average employment income is just $1,500 more than it is Whati (2014 numbers). The food price index, which compares communities to a Yellowknife baseline, shows that costs are only slightly higher in Whati than in Fort Resolution using 2015 numbers.

The evidence is clear: roads are not an efficient engine of economic growth in and of themselves. Look no further than the $300 million road from Inuvik to Tuk. Now that the Beaufort Sea is closed to exploration, the direct economic benefits of the road are limited to the construction period that is almost over. Today there’s no reason to believe the road to Whati will be any more sustainable as an engine of economic growth. It’s time to rethink our investments and choose projects that have better and longer-lasting returns for our people.

Given the choice, I will always spend money on people over roads.