There’s an island of about 570,000 people where nearly every non-bulk good on every shelf has crossed open water to get there. No road to the mainland. No rail. Everything comes by ship, and the ship costs what the ship costs.
That isn’t Alaska. It’s Tasmania.
I bring it up because when Alaskans talk about the price of a gallon of milk in Bethel or a sheet of plywood in Kotzebue, the conversation almost always ends in a shrug. We’re far away. Things cost more. That’s the deal you take for living here.
Except that other places with our exact structural problem did not take that as the deal. They treated it as a policy question and answered it. Some of the answers worked. At least one failed in a way that is more useful to us than the successes are, and I want to walk through both, because Alaska is about to be sold the version that fails.
What Australia decided
Australia runs something called the Tasmanian Freight Equalisation Scheme. The mechanism is worth understanding precisely, because the details are the whole point.
The federal government pays shippers the gap between what it actually costs to move eligible goods across Bass Strait by sea, and what it would have cost to move the same goods the same distance by road, if a road existed. Not a discount. Not a grant. A calculated difference against a hypothetical highway.
Sitting underneath that is a premise the Australian federal government made explicit decades ago: geography imposes a cost the market cannot compete away, a Tasmanian business shouldn’t be beaten by a mainland competitor purely because of water, and the mainland is better off when the island economy works.
Alaska has no analogue. None. We equalize rural electricity, through Power Cost Equalization, and we have for decades, so the principle isn’t foreign to us. We just never applied it to the thing that actually moves everything else.
Tasmania did something else too, and it’s the part that matters more. Its grid runs more than 80 percent on hydro that the island generates itself. It built its own power instead of importing someone else’s, which is the argument I made in “The price of power is the price of everything”, still standing up.
Geography sets the freight bill. Policy decides who eats it.
What Canada tried, and what it cost
Now the failure, which is the most valuable thing in this essay.
Canada faced our problem almost exactly: remote northern communities, mostly Indigenous, no road access, food priced beyond reason. So Ottawa built Nutrition North Canada, a program that subsidizes the shipping of perishable food to those communities. Straightforward. Sympathetic. Exactly what a well-meaning legislature builds.
Researchers then went and measured how much of it reached the shelf.
About 67 cents of each subsidy dollar showed up as a lower price. The rest stayed with the retailer. And the number moves in a way nobody should find surprising once they see it: in communities with two or more stores, roughly 84 cents got passed through. In communities with a single store and no competitor, about 55 cents.
Read those two figures next to each other, because they are the whole lesson. The subsidy leaked worst exactly where the need was greatest. Where a village has one store, a freight subsidy quietly stops being a freight subsidy and becomes a margin subsidy, and the family it was written for gets about half of it.
I want to be fair to the people who built that program. They were not fools and they were not cynics. They wrote a check against a real problem. The check just landed in a market with no competition in it, and money behaves differently there.
The difference, which is not subtle
Here’s what separates the two, and it isn’t that one country is smarter.
Australia pays the shipper, in a freight market with competing carriers, against a formula anybody can check. Canada paid into a retail market that is frequently a monopoly, and asked it to voluntarily hand the benefit onward.
One is a structural correction. The other is a transfer that depends on the goodwill of whoever is holding it last. Same instinct, opposite results, and the difference is entirely in the design.
That distinction is the thing I’d want Alaska to hold onto, because the moment anybody in this state starts talking seriously about the cost of freight, someone proposes writing checks. It polls well. It feels like doing something. And in a village with one store, we now know roughly what fraction of it arrives.
What I take from it
Three things, and I’ll be plain about all three.
Cheap power comes first, and it isn’t close. Tasmania’s real advantage isn’t the freight scheme, it’s 80 percent hydro that it built itself. Energy is the one cost that sits underneath every other cost, including the freight, because ships and planes and trucks all run on it. Fix that and you’ve moved every number on the shelf at once.
Second, if Alaska ever does address freight directly, the design decides everything. Pay against a formula, pay the party that actually moves the goods, and publish the arithmetic. Do not pay into a market with one seller in it and hope.
Third, and this is the part I’d argue with anyone about: remoteness is a cost, not a verdict. Every place on that list is far away. They do not all pay the same price for being far away, and the gap between them isn’t distance. It’s whether anybody treated the distance as a problem with an answer.
We’ve had two generations of Alaskans told that the price of living here is simply the price of living here. It is not. A meaningful share of it is a set of decisions, some made in Juneau, some made in Washington, most of them made by not deciding.
Your groceries cross an ocean. So do theirs. The difference is what happens on the other side.
Sources and fact notes
Tasmania’s population is roughly 570,000 and the island has no road or rail connection to the Australian mainland; non-bulk freight crosses Bass Strait by sea. The Tasmanian Freight Equalisation Scheme pays shippers the difference between actual sea freight costs and the notional cost of moving the same goods an equivalent distance by road (Australian Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts; Services Australia). Tasmania’s grid runs more than 80 percent hydroelectric. Alaska’s Power Cost Equalization program equalizes rural electricity costs (Alaska Energy Authority). Nutrition North Canada pass-through: retail prices fell by approximately 67 cents for each additional subsidy dollar, with roughly 84 cents passed through in communities served by two or more retailers and roughly 55 cents in single-retailer communities (peer-reviewed research on subsidy pass-through under limited competition, published in the Journal of Public Economics and summarized by the University of Toronto). Cost-of-living index comparisons between Tasmania and mainland Australia were examined and are not cited here: the available figures are aggregator composites whose methodology does not survive a hostile check, and one source indicates Tasmanian household power bills do not fully reflect the state’s low wholesale generation cost.