Taxpayers caught in headlights

Ottawa

General Motors now has taxpayers right where it wanted consumers. Since they wouldn't buy enough of its cars and trucks, it's now sold governments a slice of the bankrupt company.

That's not surprising. Politicians have been pouring water into holed buckets for so long that horrors from Montreal's Mirabel airport, a federal white elephant, to Ontario's eHealth records quagmire are ho-hum parts of the wasteland.

What's worrying is it's happening again with little justification and less debate about alternatives. Executives who couldn't make a profit building cars are enjoying much more success persuading governments not to let natural selection cull losers from a crowded industry.

It wasn't that tough a sell. No vote-sensitive leader is willing to let a sector synonymous with prosperity fail on their watch. Better still, opposition parties have concluded it's not in their interest to yell too loudly about the perils of resuscitating a drowning icon.

Those dangers were self-evident to anyone listening to what a Commons committee was told about auto welfare. Among others, Toronto Liberal Martha Hall Findlay left the hearings convinced that preparing for the future is better public policy than compensating past mistakes.

Even if the short-term political tactics are wonky – as federal Conservatives and Ontario Liberals too easily assume – the long-term economic logic is sound. Canada's strength is people, not multinational corporations. Common sense and fairness dictate a focus on insulating employees from the worst effects of recession and preparing them for economic change. Governments shouldn't favour one company or sector, a point forest workers will make here today by marching for equal treatment.

Rather than shovel more than $10 billion into GM now and almost certainly more later, Ottawa and Queen's Park should be investing where risks are smaller and rewards greater. Reinforcing the employment insurance safety net would cost about $1.5 billion for each year this steep downturn lasts. Catching and passing our international competitors on training, education and incentives for innovative industries would be money far more wisely spent.

That would be so even if the GM case were more compelling. It would be so even if there were more proof the 12 per cent GM stake is secure. It would be so even if the two governments were providing reports, data and models defending a decision as complex as it is costly.

Instead, taxpayers are being muscled into a faith-based bailout. It's heretical to question if GM is too big to fail, if suppliers will really die without it or if a minority stake in a desperate company can safeguard a proportionate share of Canadian production, jobs and research.

That could all be true, it just hasn't been proven. Remarkably, two governments swamped in deficits are spending billions more without exposing their analysis to public scrutiny. More remarkably, their political opponents, uncertain about the political winds, aren't demanding the transparency or accountability a gamble this problematic requires.

Stephen Harper and Dalton McGuinty insist other options were worse; that any other course would have led to six-figure job losses and severe social wreckage. Their confidence suggests there should be no obstacle to sharing the evidence with Canadians who must now pay the astonishing bill.

In the meantime, taxpayers and voters can take cold comfort from this: Buying a small piece of the company means politicians now own the bigger problem.

James Travers' column appears Tuesday, Thursday and Saturday.

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