Ontario leader says more auto bailouts to come

Associated Press, 12.17.08, 12:44 PM EST

Canada's potential $2.8 billion rescue package for the U.S.-based automakers is just the first of what could be several payments, Ontario Premier Dalton McGuinty says.

McGuinty said Wednesday the 3.4 billion Canadian dollars promised jointly by Ottawa and Ontario to the Detroit Three is simply a lifeline to sustain the industry. General Motors Corp. (nyse: GM - news - people ), Chrysler LLC and Ford Motor Co. (nyse: F - news - people ) all have large operations in Ontario.

McGuinty warns it's too early to speculate on how high the aid could go because the province is still assessing documents and plans.

His comments come one day after Economic Development Minister Michael Bryant called the possible loss of the auto industry in Ontario a "doomsday scenario" that cannot come to pass. Canada could lose more than 580,000 jobs within five years if Detroit's Three automakers go out of business, according to a Ontario government commissioned report.

Last week, Ottawa and Ontario announced they would provide the equivalent of 20 percent of whatever emergency aid Washington provides - a figure proportional to the number of vehicles produced in Canada.

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Bush administration officials were still evaluating options and attempting to avoid a disorderly bankruptcy of the companies. Congress failed a week ago to reach consensus on a $14 billion aid package for struggling GM and Chrysler.

But the Canadian aid for the automakers won't come until the U.S. makes its plans known.

Governments in Canada have helped the U.S automakers before. Ottawa and Ford Motor Co. announced in September that a new research center for environmentally friendly technologies will be launched in a government partnership that includes up to 80 million Canadian dollars ($66 million) in government funding.

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Ontario has helped the auto sector with a 500 million Canadian dollar ($413 million) fund that was designed to attract and keep jobs in the province.

Canada is attractive to the U.S. automakers because the government provides universal health care to all Canadians, unlike in the U.S. where the automakers subsidize workers' health care tabs.