Ottawa and Ontario contributed $13.7 billion to help bail out North American automakers more than three years ago and combined own about nine per cent of its common shares, but on Friday during budget consultations in Victoria, Flaherty said it's not the right time to sell.
To recoup taxpayers' money the governments would have to sell their GM shares at twice their current price.
Flaherty said when he was in private business he didn't sell stocks at half their price, but added Ontario is welcome to do what it wants.
"I respectfully don't endorse the idea that we would divest at the current share price," he said. "Having said that, if the province of Ontario wants to divest, the can ask that they divest. I don't think at this time it would be in our interest for the taxpayers of Canada to engage in a fire sale of those shares."
The minister's words follow a report in the Globe and Mail that said Ontario Finance Minister Dwight Duncan is calling on Ottawa to unload the shares.
In reaction to that report, a spokeswoman for Duncan says Ontario will take action when "time and circumstances are appropriate... to ensure that Ontarians receive the best possible return on their investment."
The Canadian Auto Workers union on Friday urged the governments to hang on to their stock.
“The Conference Board of Canada and Scotiabank have both recently issued reports indicating that auto industry profits in North America are at record highs, and poised to get even stronger,” said CAW President Ken Lewenza.
“This is clearly not the time to sell the government’s shares.”
The automaker, known derisively as "Government Motors'' for taking bailout money to avoid going under in 2008 and 2009, has long wanted the U.S. government to sell its stake and exit the business. But the government, which still owns 500 million GM shares, is waiting for the stock price to rise before making a move. The government is $27 billion in the hole on its investment, and to break even, GM shares would have to sell for $53.