Liberals tout spending, PCs push lower taxes for Ontario auto industry

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As the June 12 election date creeps closer, the leaders of Ontario's Liberal and Progressive Conservative parties are at odds over the best strategy to bolster the province's precarious auto sector.

Ontario Liberal Leader Kathleen Wynne says injecting money into the auto industry is the only way to stimulate the sector, while the Conservatives are arguing lower taxes would be more effective.

Making stops at a manufacturing factory in Windsor, Ont., and a Toyota assembly plant in Cambridge, Ont., Ms. Wynne hammered at the contrast between her plan and that of her opponent.

"In terms of the choices in front of the people of Ontario, I think they're very stark," the Liberal Leader said, later telling reporters that PC Leader Tim Hudak would "destroy the auto industry."

Her announcement was an example of Ms. Wynne's strategy to position her party as the polar opposite of the PCs. While the Liberals want to inject money to stimulate the sector – including a 10-year, $2.5-billion jobs and prosperity fund – the PC party argues that lower taxes across the board would do more good than one-off, hefty investments.

Ms. Wynne promoted her party's previous investments in the auto sector, such as a $70.9-million contribution to Ford's Oakville assembly plant in 2013, which she said helped save 2,800 jobs.

But the province's auto sector has also been under strain as companies decide to locate new plants in more affordable areas such as Mexico and Tennessee, while existing plants face an uncertain future.

Earlier this year, Chrysler Group LLC backed out of negotiations with the provincial and federal governments to support expanding its operations, including a minivan plant in Windsor. Though the company has committed to staying put for the time being, its decision not to take the public money means the company is free to pick up and leave at a moment's notice.

In Oshawa, General Motors of Canada has plans to close one of its assembly plants in 2016.

The PC party argues that its plan would help keep jobs in Ontario for the long run, without government spending. On Wednesday, Mr. Hudak criticized Ms. Wynne's announcement, saying government "handouts" just "reward the well-connected." He did not respond to a question about automotive sector bailouts helping to preserve jobs in the province.

Instead, Mr. Hudak reiterated his pledge that lowering taxes and hydro costs would bolster the manufacturing industry in Ontario.

Rising energy costs put the province at risk of losing manufacturing to other markets, Mr. Hudak said.

"When energy keeps going higher and higher and higher under Dalton McGuinty and Kathleen Wynne, eventually they're going to pull the plug, and they'll move it to the States," he said.

But neither strategy is specific enough to be hailed as a panacea for the auto sector, according to Mike Moffatt, an assistant professor with the business economics and public policy group at the University of Western Ontario's Richard Ivey School of Business.

While he said he suspects some of Ms. Wynne's $2.5-billion jobs grant would make it to the auto industry, it won't be the only recipient. As for Mr. Hudak's tactics, Mr. Moffatt questioned whether they would have much effect at all.

"There's no evidence auto manufacturers' decision on where to put a plant is made or broken on hydro costs. It's more labour costs and grants," he said.

New Democratic Party Leader Andrea Horwath has adopted roughly the same position as Ms. Wynne: She said Ontario must be willing to offer financial incentives to auto companies and other manufacturers to prevent them going to other jurisdictions.

"We … have to make sure we're providing the partnerships necessary to keep the investment here and to grow the investment here," she said Wednesday, while campaigning in Brampton, Ont. "That does mean sitting down with these companies and getting a sense of what other jurisdictions are offering in terms of incentives and what Ontario can offer."

Editor's Note: GM is not closing an Oshawa plant this summer. This story has been corrected.