Falling Value of Canadian Dollar Impacts Markham’s Purchase of Fire Apparatus

The effect of the falling Canada dollar is also being felt at the municipal and taxpayer level, with Markham paying close to $600,000 extra for several pieces of fire fighting equipment paid for in U.S. dollars.

The city has a U.S. account that is used to fund fire trucks and truck equipment, theatre acts, library books and IT services purchased in U.S. dollars.

“We’re not the only ones facing this,” said the city’s treasurer, Joel Lustig. “There is plenty of economic uncertainty out there. Do we lock in today or wait and let the Canadian dollar improve?”

But purchasing U.S. funds on an ad-hoc basis is a dangerous precedent, Councillor Don Hamilton argued during this week’s general committee meeting.

“This is gambling,” he said. “This isn’t the first time the Canadian dollar has fallen.”

Instead, the city should have a policy that allows for purchases made in U.S. funds to be postponed, Hamilton said.

He also questioned if it was better to purchase U.S. funds in bulk instead of buying on an as-needed basis – whether gaining zero interest is better than paying a high exchange rate.

In June 2014, council approved the purchase of several pieces of firefighting equipment, including a new truck, pumper and ladder.

At the time of ordering, the exchange rate was about 91.2-cents, bringing the total up to $2.06 million Canadian from $1.89 million U.S.

Final payment is due about six months after delivery of the entire truck, equipment and all, which brings us to December.

By that time, the exchange rate had dropped to 71.2 cents, inflating the original price by more than $377,000 Canadian.

Had the city waited and paid the bill at the general committee meeting, Jan. 18, when the loonie plunged to about 68.9-cents the price would have jumped from $2.06 million to more than $2.74 million.

The Canadian dollar has been on an 11-day downward spiral, which is unprecedented, Lustig said.

For more information, view www.yorkregion.com

 

No posts to display