The federal government is doling out hundreds of millions of dollars in aid to the auto industry in what has become a familiar ritual in Canadian politics. About $200-million has been earmarked for General Motors of Canada Ltd., which is investing $2-billion at three Ontario plants and significantly boosting its research and development work. Another $100-million in federal money is going to Ford Motor Co. of Canada Ltd. as part of its $1.2-billion plan to construct a high-tech assembly operation in Oakville, Ont.

This kind of public subsidy, particularly for such cash-laden global giants as GM, Ford and DaimlerChrysler (which is also in talks with government about a possible investment), is usually a bad idea. The timing of the commitment, coming just before the first national televised debate in the election campaign and at a point when the ruling Liberals have been losing ground in the crucial battle for Ontario votes, also smacks of political opportunism.

Corporate subsidies have become a campaign issue because of Conservative Leader Stephen Harper's vow to eliminate them, along with other forms of "corporate welfare." Mr. Harper has argued that lower taxes are a better way to lure and retain all types of business investment. He's right. Subsidies in general are skewed toward those industries that have the most political clout. They tend to be more about preserving jobs in old-line enterprises that have been around for decades than creating new jobs in young industries that could turn out to be the economic drivers of tomorrow.

There are times, though, when governments must respond to economic realities, and this is one of those times. James Rajotte, the Conservative industry critic, acknowledged as much when he said, "You can't have a blanket policy. . . . You have to be pragmatic about it."

The fact is that Canada simply cannot afford to be left out of the game when it comes to new auto-industry investments, because there is far too much at stake. And the federal government has an obligation to do what it can to safeguard the country's most important manufacturing industry. Ontario has not been a front-runner in the battle for new automotive investments. During the past 13 years, more than a dozen assembly plants have been built in the United States and Mexico. Only one has come to Ontario, courtesy of Honda.

Unlike, say, microelectronics, the auto industry prefers assembling its products as close to its major markets as possible. But in North America, the deciding factor on where to set up a new assembly operation is largely financial. The southern U.S. states and Mexico have been quick to offer lucrative incentive packages to lure the business. And where the assemblers go, the parts producers typically follow.

Ford has said all along that it would like to put its new flexible assembly line (which makes it capable of producing several different models) in Oakville, but that's unlikely to happen without the government support. Industry watchers have noted that Ford sees such plants as the key to its manufacturing survival, and that if Ontario loses out, the chances of winning further investments and preserving existing jobs greatly diminish.

That does not mean giving the auto makers the key to the public strongbox. But it does mean doing what is necessary to stay competitive in the battle for new automotive investments.