No matter what, someone was not going to be happy. The sale by the federal government of its shares in General Motors – acquired as part of helping the auto company restructure itself after falling into bankruptcy several years ago – was an inevitability. But the timing leaves much to be desired.
Currently, Unifor – the union that represents the workers at Oshawa Assembly – is in talks with GM on the future of the plant. Will it get new product? Will it shut down? Nobody will know for sure until next year.
What is for sure is that the federal government was in a unique position to advocate on the workers’ behalves. Instead, our local MP Colin Carrie points fingers at the provincial government over its high electricity rates.
Now, this isn’t a love letter to outright government interference. Oshawa doesn’t need a situation like Saxony in Germany, where the Volkswagen Law is in effect. That law stipulates that the regional government of Saxony – which owns a large share of the company – has the power to strike down any Volkswagen proposition that would see the potential of lost jobs or closed plants.
Instead, the federal government could have used its share power to help gain new product for Oshawa and then step out of the ownership game – it was only supposed to be temporary, after all.
Instead, the federal government has set itself up for a potentially dangerous precedent by selling off shares in order to plug a hole in the budget so that it balances out. This is a problem many state legislatures south of the border have faced for years, entering themselves into one-time deals to balance the budget. On the more extreme side, Arizona sold off state-owned land — including its own state capitol building — in 2009 for approximately US$735 million to help balance the books, opting to lease these facilities instead.
Now, this is not to say that the Canadian government will slip into such extreme territory when it comes to balancing the budget. But with falling oil revenues – which make up a large portion of the annual budget – and a proposed law on the books for balanced budgets every year, it’s something to keep in mind.
And as a recent report commissioned by Unifor shows, the Canadian economy will lose out on a lot of money if the worst comes to pass and Oshawa Assembly closes.