If regional education and health care boards still exist in 2035, they may emit an occasional curse word or two at our provinicial governments of the past … like perhaps the 2015 version.
The reasoning behind the cursing might be found in the supposition that taxpayers then will still be paying the mortgage on facilities well past their best before or expiry dates.
The previous and pretty well foolproof model of building schools, hospitals and other public facilities and then paying for them in 10 years or less, has been abandoned.
Under the previous template, a well used 10-year-old school or nursing home would begin to show signs of needed renovation and more maintenance. In some instances, expansion would be called for or perhaps updated heating and air exchange equipment.
At this point in its history, the building would have been paid for, so there would be few protestations when it would be announced that necessary improvements needed to be made.
Now, under the new template, with the temptation of lower interest rates (cheap money if you will) dancing in front of them, our provincial money managers and mongers have determined that schools, hospitals, roads and water treatment plants may now be amortized over 30 years … or maybe even longer. The slightly smaller monthly payments, stimulated by low interest rates, means more can be done with the same amount of money. Or, in the case of politicians, more can be done using even more money with more repayments being stretched out.
That brings us around to the 2035 scenario. The school or hospital that looked pretty good in 2014 or 2015 now needs serious upgrades or expansion, but alas, local taxpayers will lament, “we’re still paying for this eye sore of a building. We can’t afford to make the mortgage payments, as well as pay for major renovations. What were they thinking?”
Whether the decision is made to build today using a P3 (privately built, publicly funded) model or traditional design and build models doesn’t really matter if the amortization period is to be extended.
A 30-year mortgage on a residence is different from a 30-year mortgage on a public building that sees hefty traffic. There was a good reason to ensure facilities such as schools and hospitals were to be paid for quickly. History had taught our predecessors that if we were expecting these buildings to serve us for 50 or 60 years, we were going to have to free them up quickly on the monetary side to allow for the necessary work in the future. There would be no mortgage payment burden and therefore no call for double payments.
The debt load may shift from private to public models and back again. That really doesn’t matter. Throughout history that game has been consistently played. What does matter is the length of the payback.
Kicking the can of debt down the road, whether it be mortgages or civic loan payments, does matter.
As long as our children understand what we’re doing to them, we suppose it’s OK, but we’ll have to understand their impending anger as adults when they have to come to grips with the size of the debt load we’re leaving them; just because our governments thought it was expedient and good management to buy and build when money didn’t cost that much and time was supposedly on their side.
