Auto bailout included in $6.3-billion write off of loans

OTTAWA — The federal government says it won’t collect $6.3 billion in loans, a figure fuelled by the write off of a nearly decade-old automaker bailout that the Liberals say had no hopes of being recouped.

The Liberals have written off some $3 billion in loans in each of the past two years, but they jumped past that mark in fiscal year 2017-2018.

Key to the jump was a $2.6 billion writeoff that was part of a financing package the previous Conservative government made in 2009 to keep automaker Chrysler afloat and save an estimated 52,000 Canadian jobs. In 2011, former finance minister Jim Flaherty said taxpayers would likely never recoup the full value of the bailout when Chrysler repaid $1.7 billion provided to the restructured company, now known as Fiat Chrysler.

There was still a US$1.125 billion loan, excluding interest, sitting on the books to the “Old Chrysler” when the Liberals took office in late 2015. The company paid back about $238 million from its original loan, but the Liberals decided to write off the remaining principal and interest after officials exhausted every avenue for recovery.

International Trade Minister Jim Carr blamed the terms of the loan set out by the previous government.

“At the time they handed out the loan, they knew it would be 100 per cent written off,” Carr said. “The ‘Old Chrysler’ did not have an opportunity to pay it back ... there are no surprises here.”

Separate from the writeoffs, the government is also forgiving other debts to the tune of about $1.1 billion, including nearly $344 million that officials don’t expect to recover from student loan recipients. Combined, the annual public accounts documents show the Liberals decided in the 12 months ending in March that the government wouldn’t collect $7.4 billion owed the federal treasury — a record since they took office in late 2015.