Finance Minister Jim Flaherty conceded Friday that the cost of bailing out Chrysler and General Motors has grown larger than previously anticipated, but he stressed that inaction would mean a loss of "thousands and thousands" of jobs.
"The alternative is this: all the jobs, all the assembly goes to the United States for the Detroit Three, and that would have been the result given that the Americans had decided they were going to support the auto industry," Flaherty said in Toronto.
The federal tab for bailing out GM and Chrysler has swollen by as much as $7 billion since January, with the total bill -- so far -- coming in at about $10 billion.
That doesn't include billions more from the Ontario government, who will pump in a third of the final cost.
When both levels of government are added together, tax payers will contribute about $15 billion to keep the two struggling automakers afloat. In return for the bailout funds, the federal and provincial governments will take a stake in GM.
Flaherty didn't downplay the seriousness of the bailout, which he called a "major decision" that's "turning out to be expensive."
However, the spiraling automotive tourniquet came under increased scrutiny this week when Flaherty announced that the projected federal deficit would reach $50 billion this year. That number could swell, too, depending on the economy's performance in the coming months.
GM presented a restructuring package to the government in March, but it was rejected as their cuts didn't go deep enough.
Since then, GM has reached an agreement with the Canadian Auto Workers to slash labour costs by about $22 an hour and agreed to cut jobs and dealerships across the country.
"We want to have a viable, vibrant auto sector in Canada, not just in assembly," Flaherty said.
But some analysts have said enough is enough.
$1.4M per autoworker
A story published in The Globe and Mail Friday estimated that the Canadian bailout will cost $1.4 million for each autoworker job in the country.
"The chances of them getting much of this money back are very low," auto industry analyst Dennis Desrosiers told CTV's Power Play from Toronto on Friday.
Desrosiers said that GM and Chrysler have been losing market share for more than a decade; a trend which will be difficult to reverse.
"It would take a gigantic turnaround of unprecedented proportions in the overall auto industry and a return of much higher market shares for them to recoup this money."
In fact, Desrosiers said the bailout for GM could top $2 million per job, considering the automaker will have about 4,500 hourly positions in Canada with a total loan of about $10 billion.
Desrosiers said taxpayers are starting to wake up to these costs, but he added that so far, the public debate has thus far been muted.
"Yes, we want to save GM and Chrysler, but at what cost?"
However, former CAW president Buzz Hargrove called Desrosiers' predictions of the per-job bailout cost "exaggerations" which don't include jobs at part suppliers, dealership and other spin off jobs.
"There's thousands of jobs at stake here," Hargrove said. "If you do nothing, there's more cost to government in terms of how you deal with the fallout.
