UPDATE 1-Canada's Flaherty wants "sustainable auto sector"

TORONTO, June 6 (Reuters) - Canadian Finance Minister Jim Flaherty, speaking days after General Motors (GM.N) announced plans to close a truck plant in Oshawa, Ontario, said on Friday he wants a "sustainable auto sector."

Investing in technological innovation that pays off over the long term is the federal government's favored approach.

"We don't believe in band-aid, ad-hoc, short-term solutions," Flaherty told reporters after a speech in Toronto.

GM and other companies in the auto industry will be able to tap into the government's fledgling automotive innovation fund once the application rules are published, Flaherty said.

The fund makes C$250 million ($245 million) available over five years, and Flaherty said it will be up to the companies to propose how they use the funds.

Flaherty also said the Canadian economy is proving resilient amid global credit turmoil and the U.S. slowdown.

But he acknowledged that the effects of high oil prices and the U.S. housing recession are starting to be felt.

"The rate of growth of new jobs is slower, look at the impact on General Motors, people in the United States are not buying pickup trucks like they used to," he said.

The Canadian economy created 8,400 new jobs in May, slightly below analysts' expectations, and the job growth came entirely in part-time positions. (Reporting by Frank Pingue and Lynne Olver; editing by Janet Guttsman)