TORONTO – Ontario Premier Dalton McGuinty has opened the door to the possibility of bailing out GM pensioners despite earlier pledges that taxpayer dollars wouldn’t cover the retirees.
While discussions on the aid package for the struggling automaker are still underway and no announcement is expected until the June 1 deadline, McGuinty said the pensions costs are a sticking point that must be dealt with.
“It’s fair to say that we can’t resolve this unless we address some of their legacy costs,” McGuinty said Tuesday.
That’s a sharp turnaround from the premier’s comments less than a month ago, when he said it wouldn’t be fair to ask other Ontario seniors to prop up GM retirees if the company files for bankruptcy protection.
At the time, McGuinty said Ontario had no plans to bail out General Motors pensioners by topping up the province’s inadequate safety net and would instead seek a broader solution to help all retirees caught in the pension crisis.
But on Monday, federal Industry Minister Tony Clement said no federal money would go towards GM Canada’s pension shortfall, which is about $7 billion, and implied that the pension plan will be the responsibility of the Ontario government.
Ontario Finance Minister Dwight Duncan wouldn’t address Clement’s comments directly, saying earlier Tuesday the GM loan is still being worked out with the federal and U.S. governments.
“We have always said that keeping the company viable is the best way to protect the pension, so I wouldn’t draw too many conclusions about what’s going to come out next week in terms of the structure of how it will be done,” Duncan said.
“This is still a work in progress.”
Ontario’s Pension Benefits Guarantee Fund provides pensioners with up to $1,000 a month in the event a pension plan fails to provide its full benefit, or any at all.
It is funded by corporate contributions and currently holds about $100 million. The government has no legal obligation to top it up.
In the past, the provincial government has found ways to support the fund when it has been insufficient to meet demand, including when farm-equipment maker Massey Ferguson and Algoma Steel filed for bankruptcy during previous recessions.
Canadian Auto Workers president Ken Lewenza said he is confident some of the restructuring dollars would be filtered into the pension plans because the money is being allocated where it’s needed the most.
“I’m very much encouraged that the provincial and federal government and the U.S. Treasury will do everything in their power to restructure these companies and position us better for the future, and that will include some support for the pension plan,” Lewenza said.
“It has to be dealt with, and the premier, in the past, has said many times that they have to take some responsibility for the legislative loophole, but they weren’t going to take all of it, and that’s why they forced us to go back to the table.
“The savings that we provide the company at the table, we’ve asked them to allocate that to the pension plan.”
The union voted in favour Monday of a cost-cutting deal with General Motors, clearing a key hurdle for the automaker to receive the loans.
The company is now working on its restructuring plan, which will be presented to governments in Canada and the U.S. by Monday.
