There are two interesting aspects to this debate. The first is the cross-party battles taking place across the country. In Ontario you have provincial Liberals walking hand in hand with federal Conservatives, while the provincial Conservatives are fighting back. In B.C., where the HST is also expected to pass, a former right wing premier has teamed up with the NDP leader to plan protests against the tax. It’s a little weird, and while some of this is just plain politics, the unusual alliances also show just how divisive this tax is. I wrote more about this in a Canadian Business story — you can read it here.

I’ve written about this other issue in the past, but MoneySense magazine does a great job covering what the HST will mean to investors. There’s been some talk that the Liberals will make investments HST exempt, but so far that hasn’t happened. Read more about this here.

There are a number of other interesting HST-related issues — hopefully I can get through some of them in the weeks ahead.

We knew this was coming, but the context behind why the Canadian government is doling out its dollars, and the timing surrounding today’s announcement, is somewhat irksome.

First of all, the Conservatives were hoping to receive a restructuring plan from the companies tomorrow so they could show Canadians how their money will be used. Well, that’s not coming.

Then Industry Minister Tony Clement said in a press conference today that if the funds weren’t sent to Chrysler asap, the company would have filed for bankruptcy immediately and “whole plants or parts of plants could have been ripped up from Canadian soil and transferred to another country. And jobs would have been with them.”

Now, the funds that are going to the automakers are from a loan that they could have tapped into back in December. They’ve decided to do it now, so the government is just following through with their late 2008 commitment. Still, the fact that they haven’t submitted their restructuring plans, and they’re sending the government into a panic by threatening bankruptcy, makes me wonder — and this is part of the argument against helping the car companies — is saving them really worth it if they don’t seem to respect what the government is doing?

President Obama is at least taking a tougher stand. He announced today that the American government would consider loaning  Chrysler $6 billion if they came up with a “sound agreement that protects American taxpayers.” He is giving them enough money right now to complete their merger with Fiat (GM is getting enough cash to help them operate for 60 days), but it sounds like he’s willing to shut off the cash tap if they don’t come up with a comprehensive plan.

So, while Obama’s taking a more cautious apporach with the automakers, Canada’s government is shelling out cash at literally the same time the car companies are basically giving the country’s taxpayers the finger by not coming up with a restructuring plan.

No one wants to lose jobs, and if the auto plants close a lot of people will be out of work, but so far there are no measures in place to make sure the money the companies receive will actually be put to good use. There’s no direction from them, so we have no idea what they’ll do with the money, besides meet payroll.

The Canadian government needs to take a stronger stance here. They have to be willing to let the auto companies fail and risk putting thousands out of jobs, or they won’t see a plan, they won’t get their money back and we’ll have to rescue GM and Chrysler for months, or years, to come.

From a CQ Politics story:  “(Sen. Benjamin L. Cardin , D-Md. ) introduced a bill Tuesday that would permit newspapers to operate as nonprofits, or 501(c)3 corporations, much as public broadcasting now does.

“Under this arrangement, advertising and subscription revenue would be tax-exempt, and contributions to support coverage or operations could be tax-deductible.”

It’s been reported that the government could loosen regulations — Canwest wants a carriage fee charged to cable operators, which could net them $150 million a year — or develop a less restricted tax regime in order to help the flailing media company.

If Ottawa wants to save the company they need to act fast; the media conglomerate has to pay its bank millions of dollars on April 7.

The rescue of Canwest is interesting for so many reasons. For one, traditional media — TV, radio, newspaper — is in a state of flux right now. Major changes are on the way thanks to the internet, so it’s likely more and more media giants will be facing financial troubles in the coming years. (Assuming they don’t figure out how to make boatloads of money in whatever new model takes shape.)

So, will the government be forced to rescue every cash strapped media company? (They have said they want to help out private broadcasters in general, but Canwest is the immediate priority.)

And, even if they have the money to give out, should they? It appears the Conservatives’ main motivation for helping private broadcasters is the threat that local, small-market news will be cut. The Asper’s already put five smaller stations up for sale, and two days ago CTV announced that they wouldn’t run local news spots during Canada AM anymore. If more local news is shuttered, constituents will get angry and votes will be at risk.

There’s no doubt that the conventional, or over-the-air, TV model is in trouble, but is it the government’s place to prop up a company that’s made some very questionable business decisions over the last few years? (The New Republic anyone?)

It’s the same argument against rescuing GM — should a company be saved from itself? It would be terrible if the company went bankrupt, or if they sold off or folded assets such as the National Post, but where does the government draw the line?

Conservatives 143
Liberals 71
BLQ 47
NDP 30
Other 2

I think the Conservatives needed to get a majority if they were to have any chance of becoming a dynasty like the Liberals were in previous decades. The Liberals are now likely to replace Mr. Dion with someone who might be more of a vote getter. And as the economy sinks, the Conservatives will decline in popularity, opening the door to a Liberal government within two years or so.