Video—Financial support to the automotive sector helped short-term viability, weaknesses noted in information and monitoring

Video Transcript

In our audit of the support to the automotive sector, we looked at how Industry Canada, the Department of Finance Canada and Export Development Canada managed the $9 billion of financial assistance provided by the federal government to support the 2009 restructuring of the Canadian operations of Chrysler and General Motors.

This financial assistance involved complex transactions, high uncertainty, and tight time frames. These circumstances had an impact on what Industry Canada could do to manage the assistance.

We found that Industry Canada, Finance Canada, and Export Development Canada managed the financial support to the automotive sector in a way that contributed to the viability of the companies and the competitiveness of the sector in Canada over the short and medium terms.

Industry Canada adequately assessed the recovery prospects of Chrysler and GM. The Department also monitored the companies’ production commitments in Canada.

However, we also identified weaknesses in the way the assistance was managed and reported.

For example, Industry Canada had limited information on concessions and pension plans, making it difficult for the Department to understand the impacts on the long-term viability of the companies. Also, there was no comprehensive reporting to Parliament of information about the restructuring assistance.

In the future, the Government of Canada may again be required to provide financial assistance to a large company or an entire economic sector. For this reason, we believe it is important that the government use this opportunity to learn from its recent experience.