This is a post from Alex Carrick's blog that covers the Canadian construction industry.

Since 1985, Mr. Carrick has held the position of Canadian Chief Economist with Reed Construction Data's CanaData, the leading supplier of statistics and forecasting information for the Canadian construction industry.

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Notes from Alex Carrick - Dec 15, 2010

Alex Carrick
Does Mark Carney understand how much it costs to live nowadays?

Bank of Canada Governor Mark Carney has taken it upon himself to lecture Canadians about their excessive debt loads. The average household is said to be close to underwater with accumulated loans one and a half times discretionary incomes.

He has a point. Interest rates are near record lows. When they start to climb in about the middle of next year, the effect on carrying costs may be devastating.

Still, I’d like to share a different perspective. Does Mr. Carney fully grasp how much it costs to live nowadays? There is a good reason for the heavy debt that many of us are encumbered with.

It’s called survival.

I’m now speaking as an average citizen as opposed to a professional economist. I don’t care what the official inflation statistics say, simply getting by is becoming ever more expensive.

Relative to when our parents were raising their families, it seems that the cost of everything has grown out of proportion. A couple of weeks ago, I took eight members of my family to a mid-range restaurant to celebrate the birthday of one of our children.

I nearly swallowed my dentures when the bill came. It was $300 including tip. This wasn’t a high-end bistro. That left negative $100 for a present.

It’s easy to say we’re all going broke trying to keep up with our neighbours. Of course we are. Who doesn’t want the same electronic gadgets that everyone else has? 

Maybe we shouldn’t be going on so many trips out of the country. But when you see everyone else’s children flying off to all parts of the world, it’s hard to deny your own.

In fact, from a purely educational standpoint, getting to know the rest of the world will be important to our children’s ability to compete for a job when they become adults.

Education is a whole subject on its own. First, there’s the cost of day care for the younger set, if you’re not lucky enough to have a family member able and willing to take on the job.

Then hardly a week goes by that some request doesn’t come home from one of our children’s schools for money to finance a field trip or help with a worthy cause.

The gaps are also growing shorter between extraordinary expenses in our family to undertake repairs.

Cars are being made to higher quality standards, but that doesn’t seem to prevent them from needing costly maintenance on a regular basis.

Fridges, stoves, plumbing fixtures and furnaces all keep a stream of workmen in steady employment.

I’m increasingly sorry I didn’t pay more attention in “shop” when I was in high school.

Thank goodness medical care is mostly covered in Canada. The quality of that service is coming under more scrutiny, but at least the cost to individuals isn’t out of control yet.

But look to other areas of specialized attention. If one of your pets, Rover or Fluffy, needs attention, be prepared to deal with some pretty shady characters to arrange for a third mortgage.

In our family, we’re finding it takes two good salaries to get by. I often say to my wife I don’t know how single-parent families do it.

We’ve all done this to ourselves. Safety and environmental standards have bumped up the cost across a wide range of activities. And who can argue against a desire to breathe cleaner air or lower the risk of horrible accidents by fire, carbon monoxide or a hundred other sources? 

All of these measures carry a price.

Multi-tasking to keep up with all the new regulations and rules while also maintaining a job is stressing us into nervous breakdowns, strokes and diabetes.

Try insuring anything. It’s foolish not to. Your car, home or valuables. Wave good-bye to your money as it gets sucked down into the whirling vortex.

Incomes aren’t keeping up. In the private sector, the power has shifted from workers to corporations. We all know that if we demand too much compensation, our work can probably be done just as well by someone in Bangalore or Shanghai.

Discretionary income is the cash that’s left after taxes are deducted from wages. If incomes are only creeping upward, one has to look to the other part of the equation.

There is one way that Canadians could catch a break with their finances. That would be if taxes were cut significantly.

Our parents didn’t have to contend with a 13% HST. Nor did they have to set aside money for so many user fees that are really just taxes disguised under another name.

Of course, if taxes are lowered, there might have to be a reduction in the size of government. I don’t know about you, but I shudder at the thought of what life would be like with fewer watchdogs, regulators, inquiry boards and public hearings.

So there Mr. Carney, you may want to discuss the whole matter of how Canadians can cope better with some of your confreres on Parliament Hill. I know they’re only thinking of what’s in the best interests of all of us.

Alex Carrick

Find Canadian construction-related economic articles in Canadian Construction Market News and in the Economic Outlook section of Daily Commercial News. Mr. Carrick also has a lifestyle blog that can be reached by clicking here.


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Read Other Recent Alex Carrick Posts

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04/18 - U.S. Inflation Low in March; Canada’s Central Bank Looking to Raise Rates
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04/03 - A Tale of Two Budgets
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02/08 - Home starts and job levels diverge in Canada and the U.S.
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