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Federal budget gives a boost to auto sector

Chrysler employees assemble cars at the assembly plant in Brampton, Ont.

Kevin Van Paassen/The Globe and Mail

The Conservative government is doubling to $1-billion the amount of aid money it makes available auto makers – cash that U.S. vehicle-making giant Chrysler should be able to tap in its campaign for financial assistance with plants in Windsor, Ont. and Brampton, Ont.

The assistance will help keep jobs in vote-rich Ontario, which over the past few federal elections has become a major source of seats for the Conservative Party.

It may also help assuage fears in Ontario and the Canadian auto industry that a potential new trade deal with South Korea, a major car maker, will hurt domestic vehicle sales in this country.

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Federal Finance Minister Jim Flaherty's 2014 federal budget announced that the Automotive Innovation Fund, first created in 2008, will be expanded by $500-million to "create and sustain jobs" in Canada.

"The automotive industry is among Canada's leading employers and exporters and is a key contributor to our economy," the budget says. "The sector also directly employs more than 115,000 Canadians in Southern Ontario and across Canada from automotive assembly to parts production."

Chrysler has been lobbying Ottawa and the Ontario government for assistance to finance minivan plant in Windsor.

The fund has disbursed $316-million to six automotive assembly and auto parts makers since its inception – public money that has helped support another $2.3-billion in private sector investment.

The program's details say it provides "repayable contributions" but it's not clear how adamant Ottawa is about getting the money back. Industrial assistance programs have a history of not recouping all the cash they've disbursed as temporary aid.

Federal government officials could not recall whether any of the $316-million already paid out has been recovered.

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About the Author
Parliamentary reporter

Steven Chase has covered federal politics in Ottawa for The Globe since mid-2001, arriving there a few months before 9/11. He previously worked in the paper's Vancouver and Calgary bureaus. Prior to that, he reported on Alberta politics for the Calgary Herald and the Calgary Sun, and on national issues for Alberta Report. More

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