Don't expect bailout: Flaherty to auto industry
CTV.ca News Staff
Published Thursday, November 13, 2008 10:21PM EST
As the struggling Detroit automakers await a potential multi-billion dollar bailout package from Washington, Finance Minister Jim Flaherty said Thursday that Canada's ailing auto sector shouldn't expect a similar plan from Ottawa.
Speaking on the eve of a Conservative caucus meeting in Winnipeg, Flaherty said Canada's auto industry must come up with a solid plan for the future if it wants federal funding.
"Nobody wants to see taxpayers' money taken -- and then in effect wasted -- where a company is not going to survive ... we want to see the plan for survivability," he said.
Flaherty added that the automakers need to move towards building "technologically sophisticated" cars like fuel-efficient hybrids that will do well in a slumping market place.
"There needs to be a bridge towards sustainability," he said, adding that the Conservative government has already created the $250 million automotive innovation fund.
Both in Canada and the U.S., GM, Ford and Chrysler have faced slumping sales and cash shortfalls that have left the Detroit Three facing extinction.
Next week, U.S. lawmakers will hear from the heads of the Detroit automakers during a special Congressional session that will focus on a potential US$25-billion aid project.
While Ford and Chrysler have posted massive losses this year, GM has said that it could run out of cash next year without government aid.
However, CTV's chief parliamentary correspondent Craig Oliver said that the decision to help out the auto sector lay exclusively in the hands of U.S. lawmakers.
"If they put up $50 billion, we're going to have to put up our share," he said.
Dimming global financial situation
Meanwhile, a report from the Organization for Economic Co-operation and Development, a Paris-based think tank, said that industrialized countries should spend more money in order to mitigate a global recession.
The OECD warned Thursday that the U.S. economy would shrink by 0.9 per cent this year, which will also pull down the Canadian economy.
Economist Dale Orr of Global Insight says that Canada is in recession.
"I think we are probably in a slight recession. I think we have experienced negative growth in the fourth quarter," he said.
Still, Flaherty remained relatively optimistic about Canada's economic picture.
"It is the emerging economies that are going to bring the world out of this economic slowdown," he said, adding that China's recent stimulus package will help spur demand globally.
"Which is good news for Canada in terms of demand for our commodities," he said
"We're in a remarkably different situation, fortunately, in that we have one of the soundest financial institutions in the world," he added.
However, Flaherty conceded that the government may need to run a deficit this year.
"What we're doing is managing the economy in the best interests of Canadian families and individuals and businesses. If that means that there would not be a surplus, there would not be a surplus," he said.
Earlier on Thursday, The Canadian Press reported that the Canadian government was mulling over the possibility of selling assets, like Toronto's CN Tower, in order to make ends meet.
However, Flaherty deflected those rumours and called the potential asset sale "an extension of our expenditure management system.
"These are all steps we'd take which can help us get toward a balanced budget," he said.