How Slow Can You Go?

When you’re out for a typical drive, how fast do you travel? Under the speed limit? At the speed limit? Or over the speed limit? I’d venture to guess that most Ontarians would choose the latter, especially for those who drive on the provincial and 400 series highways.

So, if most of us are already driving over the speed limit, why doesn’t the government recognize that fact and increase the maximums? Crazy talk, you say? Not at all.

According to an editorial in the July 21st edition of Maclean’s magazine, that’s exactly what’s happening in British Columbia. The story explains that the province’s Transportation and Infrastructure Minister recently announced a wide range of changes to B.C.’s highways, including raising the speed limit on dozens of them.

Maximums are being bumped up by as much as 20 km/h on certain highways, with some limits jumping to 120 km/h, the highest in Canada. The article notes that the increases have been opposed by several groups, including the RCMP, the B.C. Association of Chiefs of Police and environmental agencies. Their reasons include everything from safety issues to environmental concerns.

However, according to the article, “In truth, there should be no appreciable impact on safety or the environment. The changes will simply allow people to get where they’re going in a lawful and timely manner.”

Maclean’s says there is plenty of evidence showing that most people’s speed is a reflection of driving conditions and road characteristics, not posted limits. As well, contrary to what you might think, “Raising limits doesn’t produce faster average speeds; it merely makes lawful what is already common behaviour.”

The article goes on to say that it isn’t the speed itself that causes accidents – it’s the difference between the fastest and slowest drivers. “A large gap between drivers’ speeds is most often found in situations with artificially low speed limits and this can lead to dangerous passing attempts, unpredictable behaviour and driver frustration: all of which most certainly cause collisions.”

As proof, the story notes that the last time B.C. raised its speed limits in 1997 serious collisions dropped by 18 percent over the next five years, despite traffic volumes increasing by about one-third during the same period.

In deciding to raise the limits again this year, the B.C. government used a background report that states, “Speed limits should be set so that they include the behaviour of the majority of drivers and provide an appropriate maximum speed.”

The guideline used to determine the new limits is the typical speed travelled by 85% of those using the highway. By that measure, it’s pretty obvious that speed limits in Ontario are completely out of whack.

In fact, transport trucks in this province are mechanically limited to a maximum speed of 110 km/h – ten clicks over the actual speed limit on the 400 series highways. And, unless I’m totally oblivious to everyone around me on the 401 or 402, most of the passenger vehicles are already driving faster than those transports.        So, what is the province accomplishing by keeping the limits artificially low?

The Maclean’s article says the changes in B.C. will allow law enforcers to put their efforts into combatting the truly reckless drivers amongst us and, thereby, making the roads safer for everyone: “The moves should free police to focus their efforts on stopping the 15 percent of drivers who exceed accepted norms and behave in ways that are obviously dangerous to themselves and others: driving drunk, distracted driving, racing, etc.”

British Columbia and Maclean’s magazine are certainly not the only two proponents of an increased speed limit. A website called http://www.stop100.ca advocates increasing maximums to between 120 and 130 km/h on Ontario’s 400 series highways. More than 28,000 people have signed a petition on the website supporting the increase.

The Stop100 site includes editorials from several sources to back up their fight, including The Globe and Mail and The National Post, along with lots of information on various studies that support an increase in speed limits.

The website also notes that 120-130 km/h speed limits exist in more than 60 countries and states worldwide – and that many countries with higher speed limits have lower or similar fatality rates to Ontario.

What are your thoughts? Do you routinely exceed the speed limit, especially on 400 series highways? If so, do you believe you’re guilty of breaking the law and should be punished for doing so – along with the large percentage of other drivers who also typically exceed the maximum? Or do you think it’s time Ontario re-examines a policy that is constantly ignored by most of its drivers? Equally important, how do we drive home that point with our provincial government?

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An Unfortunate Love Affair

Hockey. Maple syrup. Freedom. Nature’s beauty. Whining about the weather. There are so many things Canadians love. And then there’s the thing we love the most. It’s a little something called debt. We’re positively enamoured of the stuff, just can’t get enough and savour it so much we just keep adding more.

According to a recent Maclean’s magazine article by columnist Jason Kirby entitled Canada’s Fatal Attraction to Debt, our total household debt jumped from $360 billion in 1990 to over $1.7 trillion last year, a staggering increase.

What’s causing our insatiable passion for credit? It’s easy to point the finger in several directions but, honestly, there’s one overwhelming cause: low interest rates. Looking at a graph accompanying Kirby’s article, it’s amazing how closely a rise in household debt to disposable income has mirrored a similar decrease in five-year mortgage rates since 1990.

It’s absolutely undeniable that low interest rates have led to a feeding frenzy of increased debt. Kirby says it’s like watching a movie called How Canadians stopped worrying and learned to love the debt bomb.

Despite warning after warning that interest rates are bound to rise sometime soon, most of us have grown immune to such predictions. After all, the rates have been virtually locked at historic lows for so many years, anyone who forecasts an increase is generally dismissed. As Kirby says, “We’re pretty much at the point now where it’s just accepted interest rates will stay low.”

But, betting that will happen and, consequently, that we’ll all be enjoying what Kirby calls “essentially free money” for years to come is a dangerous risk.

The columnist gives a generic example of a young couple earning $100,000 and wanting to purchase a home with a 25-year mortgage. Using the accepted guideline of not devoting more than 32 percent of your income to housing costs, the couple would have been eligible to borrow $200,000 in the days of 10 percent mortgage rates, which, although it may seem hard to imagine for some, was roughly the average rate over the last 40 years.

Instead, with rates today hovering around three percent, that same couple would now be able to borrow $300,000, 50% more than in the past. If they did, they’d be paying roughly $1,420 a month. However, should rates increase to that historic 10 percent mark, their monthly payments would balloon to something like $2,700. If you’re a new homeowner, try to imagine how that would affect your life.

And, of course, the same holds true for everything we buy. As Kirby points out, “An era of low rates has desensitized borrowers to the risks inherent in carrying too much debt. A whole generation of young Canadians has come of age in an era when no bungalow, renovated kitchen cabinets or TV is ever truly out of reach.”

There’s little doubt that the entire world’s economy is one giant house of cards. It wasn’t too long before the recession hit in late 2007 that many countries, including the U.S. and most of Europe, were considered to have booming economies that, ostensibly, showed no signs of collapse. Then BOOM!

For a few short years, there were some tough reality checks where credit dried up, houses were repossessed and much of Europe was revealed to be a virtual economic sinkhole. Then things started turning around again and – voila – people returned to their same old ways.

In Canada, due to a highly regulated banking industry and some relatively prudent government schemes, we were spared the worst of the recession’s woes and some people took a small breather from spending like drunken, financially-lobotomized sailors. But, that tendency was short-lived and now we’re pretty much back to where we started pre-recession.

The one saving mercy for all of us is that interest rates continue to hold steady, long after it was predicted over and over and over by economists and other financial geniuses that they would rise. Now, even the most rabid predictors of interest rate increases are hedging their bets, saying it could happen in 2015 or the next year or the year after that.

It doesn’t much matter. As Kirby concludes so eloquently: “Central banks have consistently proven themselves incapable of spotting bubbles. It happened in the U.S. It will happen here. And when the consensus among economists, and more importantly, borrowers, is for rates to stay low, it’s a safe bet they’ll be proven wrong. The story of Canada’s love affair with debt has all the makings of a cliffhanger, and those who’ve overextended themselves are standing at the precipice.”

Don’t miss the surprise ending to this spine-chilling thriller. I hear it’s a real shocker. Or maybe not so shocking at all.