McGuinty worries auto sector rescue would drive deficit higher
KEITH LESLIE
The Canadian Press
November 22, 2008 at 12:22 PM EST
TORONTO — As governments in Canada and the United States consider rescue packages for the struggling auto industry, Ontario Premier Dalton McGuinty warned Saturday that giving taxpayers' money to support the sector could drive the province's deficit into dangerous territory.
Ontario already had to revise its budget forecasts for this year to eliminate an expected surplus and instead post a $500-million deficit.
With mayors from 22 Ontario communities pressing the province to help save the industry, auto dealers begging for help and the automakers looking for cash, Mr. McGuinty said the demands on his government are only increasing as the economic times get worse.
“The auto sector demand alone could cause our deficit to dramatically balloon,” Mr. McGuinty said after a speech to a Liberal policy conference.
“When it comes to the deficit, some people say ‘Well, what difference does it make?' Well, it makes a big difference. If we get caught with a major structural deficit, it becomes difficult if not impossible to get out of it.”
With more than 400,000 Ontario jobs at stake, Mr. McGuinty spoke about the “economic and social value” of the auto sector, making it clear the province intends to offer financial aid, even if it means adding more red ink to the books.
“We've got to balance public support and what that means in terms of costs and the absence of support — the failure of the industry — and what that means in terms of costs,” he told reporters.
“It makes for a real challenge for us.”
Analysts warned Friday that General Motors could soon be forced to seek bankruptcy protection if a U.S. government bailout package isn't worked out soon, saying the auto giant could run out of cash before January.
Federal Industry Minister Tony Clement and Ontario Economic Development Minister Michael Bryant visits to Detroit and Washington this week helped give a clearer picture of the situation the automakers face in the United States, Mr. McGuinty said.
“It was an opportunity for them to get a sense — even if they didn't get all the meetings that would have liked — they got a feeling for how things are unfolding there, which is very helpful to us.”
Mr. McGuinty cautioned the auto companies that provincial support would not be automatic, and said taxpayers want to know the companies and unions have a strategy to get out of the current mess.
“I think Ontarians are bringing both goodwill and a healthy skepticism to the table,” he said. “But they are going to have to demonstrate to us that they are prepared to do what it takes. Let's see some specific plans. Let's get some reliable assurances things are going to get better.”
However, Mr. McGuinty said taxpayers and governments also have to be realistic in demanding that car makers to switch to smaller, more fuel efficient cars and trucks, noting that five out of the top ten selling vehicles in Canada are trucks and mini-vans.
“We buy a lot of trucks and big vehicles, and we need to be honest about the demands we place on the auto sector,” he said.
“If we want them to produce more fuel efficient vehicles, I think we have to buy more fuel efficient vehicles.”
Summary:
Premier McGuinty, the premier of Ontario, is trying to decide whether to give the American car manufacturers money. The American cars tend to use lots of gas. People these days like the Japanese and German cars. This means the Americans are losing a lot of business. This is important in Canada because the manufacturers have big plants in Canada and especially in Ontario. The manufacturers in Ontario are begging McGuinty for money now. McGuinty is afraid that if he gives them money, Ontario will fall into a $500 million deficit.
If the car manufacturers don't get money, then lots of people will lose their jobs. This will cause a domino effect so that other people will also lose their jobs.
Questions:
1. How does this relate to this course?
2. Why are the problems in the car industry significant to other people's jobs?
3. How could this affect us when we become adults?
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6 comments:
I think that the American car company's should get support from Canada because many of the company's cars are found in Canada. Even though America probably wouldn't help us out we should still help. The economy is heading into a recesion, we dont really have much money to give we will eventually need to support our car company's, and our families.
This is a great example showing the controvercial topic. We have to think about the pros and cons in this topic, saving $500 million dollars from getting a deficit, or preventing a job loss of people near the car manufactureres, and keeping a good relationship with US. In my opinion, I belive that Premier McGuinty shouldn't pay our tax and money to them. Sale of the cars are competition, it is too bad that a lot of people nowadays encourage Japanese, and Germawny cars which are less gas consuming. Canada's government shouldn't help and be biased towards a specific car company from a specific country.
1. How does this relate to this course?
This relates to the course because
many of the First Nations had to decide whether or not to trade or give business with others. This is what is going on with Premier Dalton McGuinty.
2. Why are the problems in the car industry significant to other people's jobs?
Some problems in the car industry are that it can affect many other jobs. If less cars are made and sold then gas stations make less money. If gas stations don't sell gas as fast then they will not order as much gas eliminating the need for quite a few miners. Jobs are connected because of the buyer, seller relationship so if one is affected so is someone else.
3. How could this affect us when we become adults?
This could affect us when we are adults because those of us who want to get into a job to do with finding and excavating gas, there will be less jobs available and with the growing population they will probably all be taken.
They should help the American car companys because it would be the right thing to do because they are sufuring bad in America and if we do it for them maybe they would help us one day when were in need but instead of Canada helping them every other country should too.
I think this is good for American car company's to get help from Canada. I think Americans might not help but we need to do the right thing as a country.
This relates to are course because back in the old days in British North America a lot of people like the average farmers lost the trade because the people of British North America were able to get the same products for a lot cheaper. And so those farmers like the Americans today with the cars lost a lot or all there business and so the stocks are going to drop a lot and some people are going to lose a lot or all of their money.
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