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The big crush

Small increases have a big price tag

Feeling the pinch? How about the squeeze? Or is it more like a crushing sensation?

Personally, I'm going with "crush." A pinch is something like the price of gas going up - you can feel it, but it doesn't hurt much and it doesn't leave a mark. A squeeze could be the price of gas going up on one side and property taxes on the other, leading to mild discomfort accompanied by a temporary shortage of breath. Again, it's not life threatening.

A crush, however, is an entirely different bag of doorknobs swung at your knees. It's the cost of absolutely everything going up faster than our stagnant wages - for private sector, middle class-types anyway.

This isn't a gentle coaxing of toothpaste out of a tube, it's a hammer blow that empties the container and smashes the tiling on your bathroom counter in the process. This is a draining of wallets that didn't have all that much left to drain; a systemic, full-body, full-strength crushing of all our hopes and dreams. This is the race to the bottom, 100 miles an hour.

What am I raving about, you may ask? The simplest answer these days is "Everything!"

How about property taxes increasing by 24.5 per cent over the past four years (and my total bill by well over 30 per cent once fees are factored in)?

How about a BC Hydro proposal that could see our rates increase by as much as 32 per cent by 2014? Or that two-tier pricing system BC Hydro introduced a few years ago that disproportionately impacts people who live in colder areas of the province, such as our mountain town?

How about pay parking and the higher cost of fuel if you drive - and rising transit costs if you decide to leave the car at home?

How about HST adding additional taxes to products and services that were previously exempt?

How about increased Medical Services Plan rates?

How about increases to CPP and EI payments in our federal taxes?

Study after study shows that wages have pretty much stalled in this country, and may actually be moving backward. The 2006 census showed a decline in the median wage for B.C. income earners of 11 per cent over 25 years, the biggest drop for any province in Canada. In 2007, the Canadian Centre for Policy Alternatives published a report that suggested that productivity per worker is well up, though workers haven't seen much, if any, benefit salary-wise since the early '90s. And a Vancouver Sun story from December 2010 proclaimed that B.C. workers would see their after-tax income shrink the most this year of any province other than cash-strapped Ontario.

I appreciate that we're in a long and painful Great Recession. I understand that a global economy means some give and take, and that I'm lucky to live where I do and to have a job. I like infrastructure and socialized medicine and public education and police and public libraries. I'm glad Canada weathered the global economic crisis as well as it did, and I'm very glad I don't live in Greece, Iceland, Ireland or even the U.S. with its high unemployment rate and pay-if-you-want-to-live health care system.

My issue is the way that each cost increase is being treated as a little thing, a trifle, small and insignificant, completely necessary and unrelated to anything else. I don't like the way that all these decisions to raise prices are seemingly made in a vacuum, completely oblivious to all the other cost increases that people are facing. Nobody seems to be considering the cumulative effect of these increases, though we're all most certainly feeling them in their totality.

I also have a major problem with the way that these increases are being sold to us and cast in a positive light - rationalized, contextualized and perspectified (eat it Don King, I can make up words too) in ways that completely miss the point for most of us. Nobody is apologizing or striking a somber tone, or - and this would be helpful - suggesting that any of these increases are temporary. Every increase is a tiny dung sandwich, wrapped in golden foil.

According to the Vancouver Sun article I mentioned earlier, a family of four making $35,000 a year will pay $365 to $384 more for health premiums, CPP and EI this year - assuming they get a 1.8 per cent pay increase to keep up with inflation. If you're earning over $44,200, you'll pay another $76 per year for EI and CPP.

I don't know how much my property tax bill will be for 2011, but in 2010 it was $1,754 after the Home Owner Grant, up almost $102 over the previous year - and up $425 since 2007. It's impossible to know yet what the four per cent increase will mean for this year, given complicated school tax equations, fees for utilities (water, sewage, composting, etc.) but I'm fairly confident that my bill will go up by around $100.

Strata fees also continue to go up for various reasons and I'm now paying $40 per month more than I did when I first purchased my WHA home 4.5 years ago. That's another $480 per year, not including special levees for snow clearing, painting, etc. that I pay every year.

B.C. Hydro rates could go up as much as 32 per cent in the next three years according to some analysts. Just under one fifth of the revenue from those rate hikes goes to pay the higher rates charged by independent power projects that the B.C. Liberal Party has championed while preventing BC Hydro from making any new - and maybe more cost-effective - investments in public generation.

Keep in mind that BC Hydro already raised rates, from a flat residential rate of 6.55 cents per kilowatt-hour in 2008 to a two-tier system where we're charged 6.27 cents for the first 1,350 kWh and 8.78 cents for everything above that. Despite a gas fireplace and small footprint house (less than 1,400 square feet), I've yet to see a bill where I haven't paid heavy Tier 2 rates.

A good chunk of the hydro bill increase I've already seen in the last few years is related to that two-tier system, which is supposedly based on average consumption across B.C. The problem is that an average house in B.C. is a home or condo in Greater Vancouver, Victoria or Kelowna, which is where most of BC Hydro's customers live - and that also happen to have the mildest weather in the entire province. It's the worst and most expensive system that BC Hydro could have adopted for places like Whistler where we actually experience sub-zero temperatures.

I don't know what pay parking is costing me, but so far my wife and I have already burned through $50 on our Smart Meter (plus $7 for batteries that keep burning out). By the end of this year I think we'll spend around $100.

Bus fares also increased to $2.50 a ride, although passes are still a pretty good deal at $65 a month. However, since I live 600 metres down the highway from where I work, I tend to walk a lot and buy tickets for occasional use. Over the winter, when it's not always safe walking the highway and I sometimes bus to the ski lifts, I go through about 20 tickets a month. It now costs $20 for a sheet of 10 tickets, up from $15, and I'll use about 10 sheets in total from November to April. This year I'll spend about $20 to $25 extra after rates changed in February. Next winter it will be $50 to $60 more.

The price of fuel is no picnic, breaking the $1.20 per litre mark last month because of all the turmoil in the Middle East. While that's not government's fault exactly, I also don't see government doing much to stop the rampant speculation that's helping drive the price of oil well above what normal supply and demand issues would dictate. Read Matt Taibbi's Griftopia , the chapter titled "Blowout," for a full explanation, but the truth is that this manipulation of prices has been going on for years behind the scenes without much attention.

The biggest impact of higher oil prices will be reflected on supermarket shelves. The agricultural sector literally runs on oil and economists are suggesting that the price of food could go up seven per cent over 2011. That could cost my family another $35 to $45 per month, or another $420 to $540 per year.

I'm still not sure how HST will affect me, but since only low income British Columbians get rebates I'm probably paying a little more for some items. Unless you're buying a big-ticket item like a car, the HST is expected to cost the average family $250 per year (although some say the math is off and that the true impact is actually much, much more). It really depends on things like how much you dine out.

Add up all these rough estimates for 2011 alone, and my annual cost of living will probably increase around $1,300 to $1,400 this year - a total that is only going to grow with scheduled hydro increases over the next three years. Property taxes might not rise faster than inflation after this year, but it's a safe bet they're not going down, either.

The thing is, taken alone none of these increases are all that menacing, but when you stitch them all together it's like Frankenstein's monster.

Why, I wonder, isn't the cumulative impact at least being recognized even if it's impossible to address? Nobody is being dishonest here, but we're not getting the whole story either.

That's not to say that every cost of living goes up, all the time - now and then we do get thrown back a bone. The GST did go down two points, for example, although you could argue that pretty much cent of that money has added to the deficit and national debt that we're still on the hook for. Plus, it's a consumption tax, and when you don't have money to spend it doesn't make that much of a difference.

The price of some consumer items is dropping as well, like computers, clothing, and so on, and it's expected that our telecom rates could start to decline as well as competition increases. The good news is that while we have less to spend, it goes a little further in some situations.

We've also seen our income taxes drop at both federal and provincial levels by varying degrees, although it's been argued that the result has been more downloading of costs onto local governments. In terms of our total tax load, we're actually up.

Generally speaking, our income taxes are reasonable and even on the low side for developed countries, but our total tax burden has continued to rise. The Fraser Institute estimates that the total tax bill for a Canadian family has risen 1,624 per cent from 1961 to 2010, far more than housing costs (1,198 per cent), food (559 per cent) and clothing (526 per cent).

The reality is that in my household there was not a lot of discretionary spending before all these new increases, what with mortgage, strata fees, insurance (life, car and house), utilities, the costs of feeding and clothing a family, child care, transportation, saving a nominal amount for retirement and post-secondary education, paying for cable/internet/cell phones, etc. I'd estimate that least 80 per cent of our after tax household income is already spoken for, which leaves a few thousand dollars a year to shop, entertain ourselves, travel and - if there's anything left - to save for the future.

It's at the point where we have to forgo even small purchases to break even. For example, we can't just go out and buy a new pair of shoes and new pants - we buy the shoes today, if we really, really need them, then go back for the pants next month. We still eat out, but never go anywhere where the entrees are over $10. If the car needs new brakes (and cars always need something), then all discretionary spending is halted until the next paycheque. There's just no wiggle room at all in our budget for unexpected expenses.

The irony is that our economy - and especially our mountain resort economy - runs on people having disposable income to spend on things like skiing, snowboarding, golfing and mountain biking. If my three-person, two-income family is feeling the crush then you can bet that a lot of our customers are as well, and that's weighing on their decisions. We need people to have discretionary savings to be successful.

I'm not one of those free market zealots who believes that government is bad and that open markets are inherently moral and self-correcting, but spending power is supremely important to the well-being of the economy; this is why we measure consumer confidence on a monthly basis, track housing starts and employment figures, and put the fluctuations of the Dow and TSX ahead of hockey scores on the evening news.

 

Putting a happy face on it...

The tendency to rationalize these new costs to lighten the blow or make them seem more acceptable is also a source of frustration.

For example, for the past three years Whistler residents have been told that the province's unfortunate Class 1/Class 6 decision is a core reason for our municipal budget shortfall and rising property taxes, but we're seldom reminded outside of our opinion pages that rising municipal wages are more than doubly responsible. That information is buried in various reports and budget documents.

The province's Class 1/Class 6 zoning decision of 2008 costs the municipality about $2.2 million per year in property tax revenues, essentially allowing strata hotel properties to be taxed as residential properties. Meanwhile, in 2007, total municipal wages were $17,488,725, plus another $1.86 million for CPP, EI and other costs. Wages in 2011 are forecast to be $24.7 million.

In other words, our municipal wages have gone up roughly $5.3 million per year in a five-year period, but most of the blame has been placed on Class 1/Class 6 - and the predictable fact that the municipality is selling fewer housing permits as we reach build-out.

It's not exactly dishonest, all the information is public, but it seems to me that the impact of wages should have been more prominent in our budget discussions from the start, rather than acknowledged later after the public started asking pointed questions.

As it is, municipal wage increases have not gone unnoticed and have been part of a larger debate. There are lots of locals who feel the financial crisis should have been taken into consideration, rather than honouring a pre-recession agreement between Lower Mainland governments and union workers that we choose to apply to our non-unionized workforce. I'm not going to pick at that particular scab, but any honest discussion of our future financial hardship deserves an honest portrayal of all the reasons our costs are going up. Level with us. We can take it.

Another case of rationalization comes from BC Hydro. Despite major increases on the horizon, we're constantly reminded that we still have some of the cheapest electricity in North America. I personally take no comfort in that - B.C. has cheap and abundant hydroelectric power, more than any jurisdiction on this continent, and it's natural we should pay less than customers in regions that burn coal or natural gas.

It's also impossible to make comparisons unless you compare absolutely everything. Yes, power is still cheaper in B.C. but residents of most provinces don't get dinged paying another monthly fee to access medical services. Plus, anyone who gets the hydro bill in the mail won't compare their cost to customers in New York or San Francisco; they'll compare it with past bills from BC Hydro.

I'll give you two more examples of cost increases being unnecessarily rationalized and contextualized to make them more palatable to an angry public: transit costs and pay parking.

While there are some very real and very legitimate reasons that the cost of delivering transit in Whistler is increasing - many of which can be laid at the Province's feet - we were still reassured that $2.50 is reasonable because that's what it costs to take the transit in Vancouver.

The problem with this comparison of fares is that in Vancouver a $2.50 ticket can get you all the way from UBC to East Vancouver and back again, and maybe even back once more if you can get on that bus inside the 90 minutes that your ticket is good for. On evenings and weekends you can get from White Rock to Lions Bay for the same price.

Meanwhile, $2.50 in Whistler can get you from Function/Cheakamus Crossing to Emerald Estates (via every subdivision and an obligatory bus transfer in the village), and fares are one-way only. Most local trips are probably less than four kilometres and my own winter commute to avoid walking on the highway is less than a kilometre long.

In Vancouver, the temperatures are milder and if you don't want to pay you can choose to walk or ride a bike for most of the year. In Whistler, we have snow and ice, and while some people still ride bikes it's not an option for everyone. However you look at it, the services and options in Vancouver and Whistler are not even remotely comparable in terms of value.

As for pay parking, we were once again given a Vancouver comparison to make it easier to swallow: Vancouver has pay parking so it's natural that Whistler should have pay parking as well; and compared to Vancouver, $12 per day in the summer is a reasonable amount.

There are so many problems making that comparison. For example, I could point out the fact that Vancouver is a city while Whistler is a ski resort (last time I checked), and most ski resorts offer free parking - so shouldn't we be comparing ourselves to other ski resorts?

Oh, that's right, we did. According to the municipality, there is a mix of pay and free parking at resorts like Vail, Deer Valley, Breckenridge, Aspen, etc. and fair enough - those are the resorts that we generally compare ourselves to. However, people aren't driving here from Colorado or Utah, they're driving from Vancouver and Seattle and sometimes as far as Oregon and Alberta. Therefore it makes more sense to look at the state of pay parking at local resorts.

Grouse Mountain? Paved spots are $5 per day or $30 for an annual pass, and free unpaved spots are available. Cypress Mountain? Free during the winter. Mount Seymour? Free during the winter. Big White? Free. Sun Peaks? Free. Mt. Baker? Free. Mt. Hood? Free. Stevens Pass? $10 in Lot A ($5 for carpoolers) and free everywhere else. And those fees only apply to customers - I'm pretty sure staff get free parking at many of the places that do charge a fee, but in Whistler there are no exceptions.

I could also point out that Vancouver wages are generally higher while many businesses in the city provide free parking for their staff. Statistics show that average wages in Whistler are on the low side of the average while the cost of living is on the high side. The reality is that most Whistler residents can't afford an extra $12 per day in the summer or $8 per day in the winter - and that includes municipal staff members I've seen use the free parking stalls in Lot 4 and Lot 5.

So that cost gets rationalized again, this time by playing the environmental card. We shouldn't be driving and spewing carbon dioxide, the logic goes; the price of parking is high to discourage driving and get people onto the bus.

The relative speed and scheduling of buses notwithstanding, there are some major economic flaws with that argument. For a family of three, for example, the bus is actually more expensive for round trips since the fare increase, even when you factor in the cost of parking - and it's a lot less convenient if you have skis, groceries, etc. There are also no parking discounts available for people carpooling, for passholders, for employees, for electric cars or hybrids - all vehicles are treated the same, which doesn't seem fair or environmentally friendly.

I can personally confirm every small business owner's worst fear: I have deliberately bypassed going to the village because of the cost of parking. I'll get Video on Demand instead of going to a movie, make my own ice cream, order pizza in, purchase items online if they have free shipping, wait for my next trip to the city to get clothes.

The biggest hole in the environmental logic is the awkward fact that our economy relies heavily on people driving here and always will. And while it feels good encouraging people to take the bus, it seems we also need people to drive AND to pay for parking to generate municipal revenues - we already budgeted for it, even as revenues came in well short of targets.

The reality is that even if everybody actually heeded the environmental argument and stopped driving then our property taxes would have to go up even higher to bridge the shortfall.

And we'd still be subsidizing transit. If everybody took the bus then yes, the service would recover more funding, but peak hours will always be peak hours and we would have to add a lot more buses, more drivers, etc. to keep up with the demand. Meanwhile there isn't a single transit system in North America that runs at a profit, and some systems like the Toronto Transit Commission move 1.5 million people a day at full capacity.

It's important to note that 2011 is a big year for B.C. It's the first year since 2003 where the Olympics haven't dominated our discussions. It's a municipal election year. It's the year that Whistler updates its Official Community Plan to determine our future priorities.

While we may not be able to stop the financial beating this time around, we can at least use the opportunities out there to beg for mercy and more transparency in the future. It's time for elected officials and utility operators to acknowledge the rising cost of living, and the plight of people who are working harder than ever but are still getting crushed.

 

 



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