The kind of subsidies scorned by Conservative Party Leader Stephen Harper are exactly what is needed to revitalize Canada's auto industry and help attract the new assembly plants that fuel growth and new jobs, says an industry-government committee set up to examine the health of the auto sector.

Assembly plants create direct jobs, employment at parts makers and help provide a favourable balance of trade, but incentives from Canadian governments are necessary to retain factories here and attract new ones, says an interim report prepared by the Canadian Automotive Partnership Council (CAPC).

"Economic indicators underscore that Canada must move with a sense of urgency to sustain and grow its automotive industry," the draft report declares.

It does not mention Mr. Harper -- or any other politician -- by name, but it comes amid a debate about industrial policy during the current federal election campaign that set out stark differences between the Conservative Leader and Liberal Party Leader Paul Martin.

Mr. Harper talked about eliminating subsidies and corporate welfare and instead cutting corporate taxes as a way of helping the industry.

The governing Liberals committed $100-million to Ford Motor Co. of Canada Ltd. for redevelopment of its site in Oakville, Ont., and $200-million to General Motors of Canada Ltd. for a revamp of four plants and a significant expansion of research and development here.

The report by CAPC, which is co-chaired by GM Canada president Michael Grimaldi and Intier Automotive Inc. president Don Walker, was originally scheduled to be released by the end of June.

Public release of the document, however, has been put off until at least the middle of next month in part because of the federal election, some industry sources say.

But the delay is because the draft has been sent to all CAPC participants for final comments before its release next month, says Greig Mordue, a spokesman for Toyota Motor Manufacturing Canada Inc., whose president, Ray Tanguay, heads CAPC's vision committee, which was the guiding force behind the document.

The report did, however, cite commitments by Ontario and Ottawa to offer $1-billion in incentives as one of CAPC's accomplishments so far.

The document sets out four key targets:

Restoring Canadian auto production to 15 per cent of North American new vehicle sales by 2010, which would represent output of three million vehicles, compared with 2.5 million last year and a peak of 3.1 million in 1999;

Maintaining direct employment in assembly and parts at 150,000 jobs while continuing productivity improvements;

Expanding Canadian parts shipments to $50-billion by 2015 from $31.4-billion last year;

Restoring Canada's automotive trade surplus by 2010 to the $15-billion peak it reached in 1999 (it was $8-billion last year).

"The targets are achievable and represent an effort to recapture the dynamism and global leadership that characterized Canada's automotive industry through most of the 1990s," CAPC says.

But the report makes it clear that investments in assembly plants are essential to meeting those targets.

"The future of the Canadian automotive industry depends on success in two crucial and complementary priority areas: winning new investment in Canadian assembly and components facilities and enhancing Canadian investments and capabilities in automotive innovation."

It noted that cost advantages Canada has traditionally enjoyed because of government-financed health care, the value of the Canadian dollar compared with the U.S. currency and higher productivity of Canadian workers are no longer enough in the face of hundreds of millions of dollars in subsidies offered by Mississippi, Alabama and other states.

"Canadian investment incentives thus hold the opportunity to re-establish the cost competitiveness of Canadian locations for new assembly investments," the report says.

CAPC, a unique collaboration between auto makers, parts companies, Ottawa and two provincial governments, the Canadian Auto Workers union and others, was created as Ford, GM and DaimlerChrysler Canada Inc. announced plant closings in Canada earlier this decade. During the same period, offshore-based manufacturers announced billions of dollars in new investments in the U.S. South.

The final plant in that series of closings is Ford's Ontario Truck Plant in Oakville, which will shut next week.

"Since 1999, the industry in Canada has experienced a downturn measured by several indicators: output, exports, new investment and direct employment," the report says.