Bombardier subsidy issue 'sensitive'Oct. 2, 2004. 10:44 AM
DICK LOEK/TORONTO STAR
Bombardier subsidy issue `sensitive'
LES WHITTINGTON
OTTAWA BUREAU
OTTAWA—The Liberal government is worried it will be hammered in Ontario and Quebec if it does not provide hefty new subsidies to Bombardier Inc., the aerospace giant that is already one of the largest recipients of federal cash.
At the same time, Prime Minister Paul Martin's government fears that pumping more money into the aerospace industry will spark a flood of demands for help from other hard-hit sectors such as lumber and steel, a secret cabinet document shows.
"Support for Bombardier is always a sensitive issue," says the presentation to cabinet.
"Although the aerospace industry is active in all regions of the country, Quebec and Ontario would be the largest beneficiaries of government support for Bombardier and the aerospace industry. Decisions not to support Bombardier will attract strong criticism in these regions."
Bombardier, whose dealings with Ottawa have already spurred charges of blatant favouritism, is asking for nearly $800 million in federal support to develop a new family of 100-seat jets. The cabinet note indicates that the company also wants the federal government to commit to providing a total of $48 billion in sales support over 20 years once the aircraft is in production.
The government of Quebec has been pressuring the federal government to increase its financial backing of Montreal-based Bombardier.
And a senior Bombardier executive said recently that the estimated 5,000 jobs to be created by the 100-seat jet project could go to the United States or Britain if governments there are willing to pony up more financial help than Canada.
Liberal ministers have hinted in the past few days that Ottawa is likely to respond favourably to Bombardier's request. But the government is well aware that it is a political thorny issue.
After pointing out that turning down Bombardier would prompt criticism in Ontario and Quebec, the document goes on to say: "Conversely, any government support for the aerospace industry would need to be balanced against other government priorities, as it will strengthen calls for financial assistance for industrial sectors in distress (agriculture, steel, softwood lumber, etc.)."
The Liberals have been under fire for years for huge subsidies to Bombardier.
As well, Auditor-General Sheila Fraser slammed the government of former prime minister Jean Chrétien for what she said was the unnecessary purchase of two new Bombardier executive jets for $100 million.