Ottawa doesn’t expect to get back the billions in taxpayers’ dollars it’s investing in General Motors, but Canada risked losing its entire auto industry if it didn’t take a role in Washington’s restructuring of the troubled sector, Prime Minister Stephen Harper said yesterday.
It’s regrettable that public money is funding the $10.5-billion bailout of GM, but the move is a necessary one amid a global recession, said Harper.
“We don’t intend to run automobile companies … In fact, we are seeking to exit our equity position in a reasonably short period of time,” he said.
“Clearly, taxpayers will get some money back when the day comes that we begin to sell our equity share but, to be frank, we are not counting on that.”
Under the deal with Ottawa and Ontario, GM will not file for bankruptcy protection in Canada — protection it sought from its creditors in the U.S. yesterday.
Canadian taxpayers will own 12 per cent of a restructured General Motors in return for providing the troubled automaker with $10.5 billion. Ontario will be responsible for $3.5 billion of that amount.
The two levels of government plan to fully divest their stakes by 2018 at the latest.
“The Bush administration’s decision to support the restructuring of Chrysler and General Motors left two options for Canada; either participate in the restructuring of these companies, or stand idly by as they are completely restructured out of Canada,” Harper said.
CAW president Ken Lewenza said without the bailouts, “hundreds of other companies, from auto parts suppliers to neighbourhood cafes and dry cleaners, would face a grim future.”
Industry Minister Tony Clement noted $1.3 billion of the funding is “repayable over eight years maximum, with a seven per cent interest rate. So we will get our money out that way.”
The Ontario government said it was worried the province would lose 85,000 jobs if GM was allowed to fail. Ontario has lost 171,000 jobs since October.
The province failed to meet its goal to retain about 20 per cent of GM’s North American production, which will fall to 16 per cent, even though the province will contribute about twice what it originally planned, Premier Dalton McGuinty admitted.