I have two in-laws who lost jobs - or avoided losing jobs by moving first - recently in the auto parts sector so this is no idle question. It is interesting to note that both landed new work likely thanks to a Canadian dollar that wisely shed 20-25% of its value against the US buck. But, still, there is the question - does Canada move to deep deficit to aid the auto sector?
Mr. Harper may be forced to act fast. Over the weekend, the U.S. Congress and the White House pushed towards a deal to throw the carmakers a US$15-billion lifeline that would keep them operating into next year, when the Democrats take control of executive power in the United States. Lawmakers are expected to begin debating an aid bill as early as Monday. Canada will have little choice but to match what Congress does because the auto industry is so integrated between the two countries, analysts say.
What if we don't? What if the same Federal funds are used in another way. David has stated in the comments that the GST should just be scrubbed. But what about a six month drop on income tax of something nutty like 5 points off the marginal rate. That would put really money back in pockets. Or what if it is all given to Visa and Mastercard to pay off everyone's people's Christmas spending?
Or what if - to quote a hundred generations of my Scots forefathers - ye dae nuthing ye unfrugal gud fer noughts! Can't we just suck it up and not dig ourselves a deeper hole? I mean if no one is going to buy cars in 2010 at the rate they did in 2004 - why place the nation's wealth in that infrastructure. Why not spend it on public infrastructure?

Comments
Ben (The Tiger) - December 8, 2008 9:55 AM
If we must pitch money down a hole to feel good about ourselves, I'd much rather have some highway overpasses and improved sewer systems -- oh, and a subway line on Eglinton Avenue to Pearson -- left lying around afterward.
sean - December 8, 2008 9:58 AM
A partial prop up of firms that promise to re-tool and make only fuel efficient vehicles combined with a re-training fund to get workers back into the job market with needed trade skills of other skills that are currently farmed out overseas (like call centres). Granted, places like StarTek pay only $10 an hour, but I am sure they are tired of going through staff like they do. Maybe an all around re-jigging of the EI system to help firms that out-source retain, retrain and hire staff for a year.
Frankly, I will be ticked if I see my tax dollars pay to prop up a truck or mini-van plant.
Robert McClelland - December 8, 2008 10:07 AM
If the US bails out the auto industry then we will too. There simply won't be any other choice.
Aside from that, I'd like to know why so many people vociferously disagree with bailing out the auto industry yet never utter a peep when other industries are bailed out. It was only a few years ago that the government poured nearly a billion dollars into the beef industry to save them from their poor business model.
sean - December 8, 2008 10:16 AM
Because we all like steak and the auto industry here is clambering for cash because of bad planning on their part.
The beef industry had issues years ago because of US protectionist lobbyists who jumped on the mad cow bandwagon. Now, if there is a push to bail out crop farmers, I'll be agin' that as well. Crop insurance is there for a reason.
I'll say it again, this recession is a good excuse to clear up the system, defrag and re-boot.
Alan - December 8, 2008 10:18 AM
But I will buy the best part of a cow over 2009. I will never buy a hummer or any other SUV. I think the beef industry is dandy - build a cow, sell a cow, eat a cow.
Paul of Kingston - December 8, 2008 10:23 AM
There is no doubt that the big 3 contribute a hefty chunk to our national economy - and it would be a shame to lose that for the sake of 12 to 18 months of "bridge financing".
However, any bailout money must be evaluated on its merits as an investment that will preserve the economic benefit (and not say on its vote getting potential).
When premier of Ontario Bob Rae wrote a sweet cheque to the big 3 in the form of pernmission to not fully fund their pension plans (on the premise that they were too big to fail). Only GM was stupid enough to take them up on that and that presents a problem. Even though GM may be the least economically viable of the three and therefore perhaps should be sacrificed for the long term benefit of the others, the Province of Ontario may be on the hook for keeping GM's pensioners in the money.
Furthermore - if we are going to contemplate a several billion dollar investment to keep several tens of thousands of people working then why not back a winner - like Subaru, Suzuki, Hyundai, Kia, Nissan - all firms with vastly greater equity in the design of their vehicles and production techniques than the big 3 and none of them in Canada.
Or how about investing the money in a truly made in Canada automobile company (no ot that Bricklin nonsense again) one that might think that a galvanized steel unibody frame with plastic body panels might be a good thing for us northerners.
Or hell - maybe just a high speed rail corridor between Quebec City and Windsor.
Hans - December 8, 2008 10:49 AM
People complain about auto industry bailouts (a) becasue they have happened a few times before (b) they get routine cash injections from Ontario and Canada and (c) they purport to be doyens of free-market capitalism.
Farmers, on the other hand, beef, potato, pork, are beleive to be mostly just farmers, not particularly emblematic of an economic system.
That being said, a lot of people do complain about the bailouts and handouts in resource industries like agricutlture or the Atlantic Fishery.
My view on both is similar: If you can't make money at it, your'e doing something wrong. Get out of the business.
sean - December 8, 2008 10:54 AM
Paul: You forgot Toyota. I own two 2007 models and they are excellent on gas and well made. We stopped buying Big Three cars years ago due to quality issues.
Hans, your last point is a good one. My wife, a farmers daughter, reminds me constantly that my idea of a bumper sticker that says "No, sorry, cities feed farmers" will only result in a few tire slashings..
seanie - December 8, 2008 10:57 AM
Oh ho!
Yes you need the http then the colon, then two slashes then:
ca.news.yahoo.com/s/reuters/081208/us/usreport_us_gm_ad
Robert McClelland - December 8, 2008 11:12 AM
<i>Because we all like steak</i>
I bet you could go without eating steak longer than you could not driving your car.
<i>and the auto industry here is clambering for cash because of bad planning on their part.</i>
The same can be said about the beef industry. Nobody forced them to deal almost exclusively with the US nor did anyone force the industry to almost completely abandon their own meat processing.
David Janes - December 8, 2008 11:23 AM
The issue with sean's plan that the auto industry should only do "fuel efficient vehicles" is that these are money losers - a promise to do this would be throwing a boat anchor to a drowning man.
Ultimately, I believe that McClelland is right in that "we" will have to bail them out, mainly because the US is doing so. However, the federal government should make sure that Ontario is picking up a significant portion of the tab, since they are the primary beneficiary. Otherwise, why does Windsor, Ontario get preference over Windsor, Newfoundland?
I wish we could cut one of them loose, GM as per PoK's suggestion above. Alas, do we see that happening?
Now, back to Al's original meta-point about the economy. Will this help? No, but if the big-three disappear in Ontario we're talking about prolonged, deep depression territory for our province.
sean - December 8, 2008 11:39 AM
Sorry, I am not meaning teeny tiny Yaris like cars, I mean not making trucks and SUVs that are unneeded really. Cars, more efficient than trucks, make more sense.
And yes, Robert is right. I could entirely shuffle beef out of my diet, but I can also drive less than I do, of were I to live in the city, ride my bike and only rent a car when I needed to get to a meeting out of town.
Alan - December 8, 2008 11:46 AM
I could not shuffle meat out of my diet or or grain or dairy or vegetables or fish all of which have been the subject of huge government subsidy one way or another in my adult life. Far easier to rid myself of a car.
sean - December 8, 2008 12:17 PM
There is always soylent green...
Alan - December 8, 2008 12:31 PM
Did you ever notice how The Matrix was not very original in its plot?
Renee - December 8, 2008 12:59 PM
Hans: Yes but. Many of those businesses you cited are subsidized by the fact that slave labour is so much cheaper in other countries and transportation and shipping costs have benefitted from a lack of regulation and flags of convenience, not to mention underpriced oil for the past three decades. Doing something wrong, maybe, but maybe also a living wage and benefits just cost more. Are we willing to admit that our lifestyle can't compete in the global model, that our environmental regulations and workplace safety and social welfare can't compete either?
Renee - December 8, 2008 1:02 PM
Sean: Preference for Soylent Green varies from person to person.
I just bought my self a brand new used 2004 Hyundai Accent, very affordable. The guilt, after ten years of stubborn refusal and biking through snowstorms, that I now own a car? Priceless.
sean - December 8, 2008 1:13 PM
" This economic crisis is brought to you by Soylent red and Soylent yellow, high energy vegetable concentrates, and new, delicious, Soylent green. The miracle food of high-energy plankton gathered from the oceans of the world. "
Ben (The Tiger) - December 8, 2008 1:47 PM
Again, if we're going to pitch money down a hole to "stimulate" the economy, build us a damned subway.
And build us a high-speed rail line that goes from Quebec City to Detroit, while you're at it -- and offer to go 50/50 with the Americans on a New York City extension.
I want cool infrastructure if we're going to be spending money like drunken sailors.
Ben (The Tiger) - December 8, 2008 1:48 PM
(Subway to the airport, I mean.)
sean - December 8, 2008 1:57 PM
Need I link to the Monorail Song from the Simpsons...
I think this is it (insert the double-yahs):
youtube.com/watch?v=xaBe7bMOEL0
Renee - December 8, 2008 2:11 PM
I yearn for a return to rail as the primary mode of transport. If there shall be scandal, let it at least hearken back to the original one.
Hans - December 8, 2008 2:24 PM
Not bailing out the big 3 car companies would be the most progressive thing we could do. They are dinosaurs.
As for our farmers and fishers, they can't compete in the global market. An alternative to getting out of the business? Go local. People will pay more for local food.
David Janes - December 8, 2008 3:04 PM
Holy moley: everybody wants to rule the world.
Alan - December 8, 2008 3:25 PM
I was waiting for a Tears For Fears reference.
Seanie - December 8, 2008 3:48 PM
Dang Alan, beat me to it...
" People will pay more for local food. "
I won't. I want the blemish free apple, the biggest avocado, the greenest okra and the honkin huge Mexican Blackberries. Its a world economy now folks and I want to eat the world.
David Janes - December 8, 2008 3:52 PM
I dunno. No one sang my praises when I worked about 8 XTC references into a comment that one time.
temujin - December 8, 2008 3:58 PM
There are plenty of other jobs for those automobile folks to do.
And if we are going to build anything in the transportation sector, I feel it vital that a Smithers to Vancouver high speed rail system be in place.
Oh, and my small business could use a hand out, too.
TRex - December 8, 2008 5:45 PM
I haven't owned a vehicle for five years. Depending on where I live I use public transit which is well developed in Europe and parts of Russia (heheh). I don't eat beef or pork, just chicken and Hobo Beans.
And my RRSP has lost 25% in two months so I think this is the way it is folks.
Matthew Fletcher - December 8, 2008 6:36 PM
1. I agree with Ben, spend public money on public things (that may not be exactly what he said)
2. I eat steak several times a month, and beef (when counted in other forms) even more than that; I have never owned a car and do not intend to until I don't have to put gasoline in it. Cows before cars.
3. That said, we do bail out the farmers a lot. Better than the cities feed farmers line is this one though: "If you farmed today - thank a taxpayer." (courtesy of Andrew Potter at Macleans).
4. Renee is partly right that our manufacturing cannot compete with other parts of the world. There are very few things that can be made here that cannot be made much cheaper in Asia. That said, it does not mean, "that our environmental regulations and workplace safety and social welfare can't compete either." We're just doing what we've always done - exporting our less desirable jobs and replacing them with better ones. In the 19th century people stopped farming and started working in factories. Today, they are stopping working in factories and moving on to the next thing. Finding the next thing can be hard though.
5. Despite many people's love for trains (including my own) the train was really only a major form of transportation for about 100 years (1840-1940) and that span is even shorter in North America. Individual modes of transport have always predominated, especially in North America, ie. the horse and car. Individual modes of transport aren't going to go anywhere, there's simply way to much infrastructure and design of our continent tied up in it. But we are going to have to figure out how to do it better.
6. And yes, if the U.S bails out the cars makers, Canada probably will too.
Matthew Fletcher - December 8, 2008 6:40 PM
The canoe! How could I forget the canoe!
The canoe and kyak is Canada's contribution to the need to traverse the continent (relatively) individually.
Johnny Nemo - December 8, 2008 7:40 PM
At first blush, it sounds good to me to let car manufacturers drown but invest in rail to rescue displaced workers and industry. It's true that the greatest days of the train are in the past, but fresh great days are coming in Europe and Asia.
We in Canada are perhaps better equipped than the USA to implement a national rail plan. We have fewer people and greater distance between them, meaning our major transportation corridors are fewer but high-traffic. We have a willingness to spend public money on such projects, where the USA would screech "Socialism!" We could even do this as one of the dreaded P3s -- as long as it's not the typical "the public pays for it, and the company owns it" arrangement; perhaps public ownership of the right-of-way, with sweetheart deals for companies to operate it.
Air travel is going to continue increasing in cost, for some people and goods prohibitively so. If people could get from Vancouver to Toronto in comfort and dignity in a couple of days for a cheaper ticket, they might forego the speed of aeroplanes.
Just as the "National Dream" did way back when, a railway close to the border would firm up our belly against the 'Merkins, and we might make a buck or two shipping their goods across the continent.
This is all off the top of my head. Counterpoints, anyone?
Jay Currie - December 9, 2008 12:03 AM
Let me get this straight...the US goes for 15 billion and we go for <b>6 billion</b>. Am I the only person who sees that as just a little, tiny, bit over the odds.
And it's a bad idea to boot. These folks need to fail. Then restructure and move on. Saving them this month means they will want to be saved next month and the next and so on. To what end? It is not as if we are going to run out of cars.
Alan - December 9, 2008 6:59 AM
Does the same apply to the Prairie grain farmer? Do different segments of the economy get judged beyond simple market demand and price?
sean - December 9, 2008 10:05 AM
I'm with Jay. 15 B versus 6 B... seems a bit over the top for me. Based on population, shouldn't we be offering them, oh, 1.5 billion?
I have never been a supporter of marketing boards or farm subsidies as they keep the inefficient afloat on dreams of the mystical family farm ideal. They also keep jerks like the members of the those crazy Landowner Associations afloat.
Its a world economy, things shall fall and restructure accordingly.