Ottawa won't bail out GM pension plan, Clement says

OTTAWA and TORONTO -- Industry Minister Tony Clement said Ottawa will not provide assistance to the General Motors of Canada Ltd. pension plan, insisting any taxpayers' money to shore up the $7-billion shortfall will come from the government of Ontario.

An agreement reached last week between GM and the Canadian Auto Workers would see the company use savings generated by cost-cutting plus government restructuring loans to reduce the pension deficit by as much as $4-billion.

GM workers voted 86 per cent in favour of the labour agreement yesterday. So if a proposed government rescue package is approved, the benefits of current GM pensioners would be guaranteed.

But Mr. Clement yesterday rejected suggestions from opposition MPs and conservative lobbyists that Ottawa is reversing its stand that it would not subsidize the company's retirement plan.

Asked in Toronto whether federal money would support GM pensions, the minister said, "It won't."

"The fact of the matter is that we are each taking roles and responsibilities in the areas where we have roles and responsibilities," he said, adding that there is no agreement on a bailout package.

The U.S. and Canadian governments have given General Motors until May 31 to have a credible restructuring plan that would make the company competitive over the long-term. The company is seeking $30-billion (U.S.) in loans from Washington, and an estimated $6-billion (Canadian) in Canada, to be split two-thirds, one-third between Ottawa and Ontario.

Mr. Clement said the province has negotiated with GM over the contribution the company must make to the pension plan. Federal officials say any taxpayers' contribution would be more than covered by Ontario's share of the loans.

Liberal MP Frank Valeriote said the minister's argument amounts to a smoke screen to cover up his about-face after insisting Ottawa would not expect federal taxpayers - many of who have no pensions - to contribute to GM's rather-lucrative retirement plan.

"It's indirectly subsidizing it, absolutely," Mr. Valeriote said.

He said the two-third, one-third split planned for the GM loans is the same division provided in the $3.8-billion loan package provided to Chrysler LLC - and that covered an overall restructuring plan.

"It has to be an admission on his part if GM gets the money that it will be an indirect contribution to the pensions," Mr. Valeriote said.

But the Liberal MP ducked the question as to whether Ottawa should contribute - either directly or indirectly - to the pension plan as part of the effort to keep GM Canada in operation.

Prime Minister Stephen Harper has said his government has little choice but to aid General Motors and Chrysler, because the U.S. government is prepared to impose a political solution that would force the company to relocate out of Canada if governments here were not providing financial assistance.