There’s no question the federal government needs to come to the aid and assist the Big Three automakers; if done correctly this can be achieved with an end result that benefits the Canadian taxpayer.

This was proven in 1979 when the U.S. taxpayers assisted Chrysler Corp. as the automaker was on the brink of collapse. Then President Jimmy Carter ensured strings were attached that protected the said investment and when all was said and done the U.S. government made roughly U.S. $400 million.

Letting these companies simultaneously fall into bankruptcy is not an option for the government in these current economic times; just taking GM into consideration, if they were to file for bankruptcy not only would there be tens of thousands of current job losses in auto assembly and parts manufacturing, there would be hundreds of thousands of spin-off jobs forever lost. For every one job in auto assembly 7.5 other spin-off jobs are indirectly created.

This does not take into account the thousands of pensioners that rely on their GM pension. When a company files for bankruptcy protection in Canada the first people to be paid are the current employees, then the secured creditors (the banks) then the unsecured creditors, next is the preferred shareholders followed by the common shareholders, then finally the pensioners. When bankruptcies occur retirees rarely see any money.

GM filing for bankruptcy would no doubt have a devastating effect on an already shaky economy.

The automotive industry is Canada’s largest manufacturing sector, accounting for roughly 12 per cent of manufacturing GDP and over two per cent of total industrial GDP.

The current recession we are facing is similar to the one we faced in the early1990s. If the Big Three were to simultaneously fall in these troubled economic times there’s a good possibility we could go from a recession to a depression similar or worse as what we faced in the 1930s. Inaction from the government is not an option. Nevertheless there needs to be strings firmly attached to any investment of taxpayers’ dollars.

Not only does the government need to ensure that any investment hinges on the Big Three producing viable products for the marketplace, more importantly they need to ensure that taxpayer dollars are not used for executive compensation. Provisions need to be in place that prohibit golden parachute packages for top executives. Rigorous independent oversight needs to be in place, and other taxpayer protections.

I understand there are many people who believe the Big Three should independently fix the monster they themselves created. To those I say consider this investment a necessary evil; without investment from government to the Big Three, the Canadian economy will tailspin to unprecedented levels that could take decades to recover.

Jeff Casey
Stratford