THE CANADIAN PRESS
TORONTO - 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 Monday.
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. on Monday.
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.
"I wish there were an alternative but the alternative to what we're doing today would be vastly more costly and more risky."
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.
"This is not just about saving direct auto jobs, it's about reinforcing the foundation of our whole provincial economy."
The federal and provincial governments had to provide more funds than anticipated in a $3.8-billion deal in April to help Chrysler survive, almost twice as much as was initially promised to cover both Chrysler and GM.
When asked if Canadian taxpayers could be asked to pour more money in the auto sector, Harper said the amounts announced so far are sufficient to restructure the sector - calling it a one-time cost.
Industry Minister Tony Clement noted that $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 rest of the money is in equity... I'm not guaranteeing we'll make every penny back," Clement told Business News Network, a cable TV business channel based in Toronto.
The U.S. government would hold 60 per cent of the new, slimmer GM when it emerges from bankruptcy protection.
The Ontario government said it was worried the province would lose 85,000 jobs if GM was allowed to fail. Ontario has already lost 171,000 jobs since last October.
Premier Dalton McGuinty said it's not an easy choice but the right one to save thousands of jobs and entire communities from financial failure.
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 under even though the province will contribute about twice what it originally planned, McGuinty admitted.
"We bargained hard to maintain a greater level of production, but it just wasn't there for us in the end," he said.
