Taxpayers in the dark over billions spent on auto bailouts, auditor says

OTTAWA—A federal watchdog is urging the government to publicly report on its billion-dollar contributions to bail out automotive firms in the 2009 recession, saying that even today Canadian taxpayers remain in the dark about how much they might have lost on the deals.

In a report released Tuesday, auditor general Michael Ferguson reviewed Ottawa’s efforts to join with Ontario and the United States to help keep General Motors and Chrysler afloat during the recession.

Ottawa and Queen’s Park contributed a total of $13.7 billion to the two firms in 2009, fearing that collapse of either company might trigger a domino effect in the Canadian auto sector.

Ferguson gives the government passing grades for its efforts, noting that politicians and bureaucrats were forced to make decisions in challenging circumstances.

“This financial assistance involved complex transactions, high uncertainty and tight time frames,” he said.

Despite that, Industry Canada, Finance Canada and Export Development Canada managed the financial support in a way that helped the viability of the companies and competitiveness of the auto sector, the report found.

Still, the report does highlight the fact that Industry Canada did not assess the impact of concessions to be made by the unions, suppliers and dealerships on the companies’ costs or long-term viability.

As well, the government is in the dark about how the companies used some of the government cash. For example, Industry Canada has limited information on how GM Canada actually used a $2.8 billion loan earmarked for capital expenditures, warranty claims and other corporate purposes. And the department has no documentation on how $528 million for general corporate purposes was ever used.

Without those kinds of details, Ottawa cannot know how much its financial assistance ensured the viability of Chrysler Canada and GM Canada, the report said.

Ferguson notes that four years after Ottawa tossed the auto firms a financial life preserver, it’s not clear what it has cost taxpayers because there has been no comprehensive report to Parliament.

“We found it impossible to gain a complete picture of the assistance provided, the difference the assistance made to the viability of the companies, and the amounts recovered and lost,” the report said.

The auditor general is urging Industry Canada, together with other agencies involved in the bailout, to publish a report with “clear information” on the assistance provided to General Motors and Chrysler. That should include how much funding was provided, how it was used, how much has been repaid and the cost of the assistance.

In a response, the government agreed with the recommendation and said it would have a report done by the end of 2014.

Original Article
Source: thestar.com/
Author:  Bruce Campion-Smith