In recent months a confusing array of statements, all citing the need for higher rates, fees and taxes, has appeared. It's everything from whether to pay for the Evergreen Line (evergreen because we will pay in greenbacks forever?) to hydro rates, ferry rates and even the municipal tax bill increase, which "magically" is not 2.48 per cent, but more like four per cent or even six per cent.
If you are a senior or on fixed income, all these increases are eating into the same amount you have been living on for some time. Your purchasing power is down, with less money for food, etc. If your interests take you into the international scene, you will know that several European countries are grappling with massive debts, and in the U.S., there are those who say it is in serious trouble.
There is some fancy financial footwork going on. It's complicated, but let me try to explain.
When we buy a home, we typically take out a mortgage and pay it back over say 25 years with the clear expectation that the house will last more than the 25 years of the mortgage. We pay as we use it. However, when we buy less expensive items, such as groceries or insurance, we pay up front for the goods or service.
Several decades ago, houses, cars and major purchases were paid for in advance - from savings.
This was before credit cards. Then, smart financial types figured out folks might buy if they could "pay over time." Thus mortgages came into existence along with various rules related to ability to repay, down payment, length of mortgage, etc.
Now, whether looking at Greece, Ireland or the inflated mortgages sold in the U.S., the general result has been the rules about repaying have been stretched too far. There's concern about the ability to repay.
If not, major financial shock for all of us. Fortunately in Canada, we have stiff rules in place in many parts of commerce. Good for us, I think!
B.C. Hydro's expansion of the 1950s, '60s and '70s was largely financed by long-term debt. Now we are being told we must con-tinue to pay off these debts and at the same time pay now for future upgrades - in cash in advance. Now the rates are going up fast!
Meanwhile, B.C. Ferries wants passengers to pay for new ferries, something that had been financed by the provincial budget.
When Delta was growing quickly, in the '60s, '70s and '80s, we took on significant debt to pay for the roads, sewers, sidewalks, etc., all needed to build our community. Those debts are being paid down by those who use them - over 25 years, for example.
Recently Delta council congratulated itself for lowering the municipal debt and reduced interest and repayment charges. It has also caused much more of our ongoing repairs, improvements and replacements to be paid up front. The combined effect has reduced our debt but has also has increased our taxes.
So is this good? Yes and No. It's a balancing act. There are guidelines and procedures used to measure which way to go, but governments don't seem to be paying attention.
If too many agencies and governments all decide to go for cash in advance, our rates and taxes will go up quickly - faster than our incomes. Ugh!
