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Al Power's former boss Belinda Stronach is running for the Conservatives, but Mr. Power thinks her boss Stephen Harper is off base about cutting government incentives to the auto industry.

A decision by Canada not to try to compete with Alabama, Mississippi and other southern states that are throwing around hundreds of millions of dollars in incentives "would be suicide," said Mr. Power, president of auto parts maker Decoma International Inc.

Mr. Power's feelings are indicative of some Canadian executive reaction to Mr. Harper's proposals. Many executives canvassed yesterday liked what he had to say about cutting corporate taxes by $4-billion and pushing for greater ties with the United States. The message from some corporate suites is that, philosophically, they like the slant of Mr. Harper's laissez-faire policies. But when other countries are boosting support for home-grown industry, they feel threatened by talk of slashing government handouts.

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This conflict is captured at Decoma, the plastic exterior parts-making division of Magna International Inc., where Ms. Stronach was president until resigning in January, first to run for the Conservative leadership and now in the Ontario riding of Aurora-Newmarket.

"The other alternative for the Canadian government is to step in and get the [United]States to live up to the spirit of free trade," Mr. Power said, by eliminating the subsidies that have led to the creation of Detroit South in Dixie.

But U.S. states continue to offer subsidies so Canada has no choice but to play a similar game, he and other auto industry officials say. Canada has a booming trade in automotive products with the United States, racking up a $22.2-billion surplus last year, for example.

Mr. Power, whose company has received no government money, serves on the Canadian Automotive Partnership Council, a joint industry-government-union group. The group recommends ways to improve the health of Canada's auto industry.

"We formed CAPC and we'd welcome Stephen Harper to come and sit down and understand the issues of our industry," Mr. Power said yesterday. "Hopefully, Belinda gets elected to the federal government and [she can]educate him."

It's a similar refrain in mining, where companies would welcome Mr. Harper's tax cuts but not at the expense of provisions that stimulate the industry, said Dan Paszkowski, vice-president of economic affairs with the Mining Association of Canada.

Mr. Paszkowski said it's unclear whether a Conservative vow to eliminate "corporate welfare" would threaten programs such as investment tax credits on flow-through shares--that has pumped millions into mining exploration--and the accelerated capital cost allowance, which allows companies to write off capital costs until big projects go into production.

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That provision, brought in by the Liberals in the mid-1990s, triggered an explosion of investment in the oil sands, Mr. Paszkowski said.

It gets further complicated when individual firms are targeted. Mr. Harper, in a speech Wednesday in Toronto, singled out Montreal-based aerospace and transportation giant Bombardier Inc. as a recipient of government largesse.

"We really appreciated the fact that [he]described Bombardier as one of Canada's success stories," said chief spokeswoman Dominique Dionne. "But we also noticed that he took us as an example of a company that benefits a lot from government programs."

Ms. Dionne said the Technology Partnership Canada program, targeted by Mr. Harper, has been "a genuine partnership" between Bombardier and the government and that the company has fully repaid the initial loan it received under the program with a "pretty high" rate of return.

"So when [Mr. Harper]was mentioning that there's a very, very low percentage return, this is not the case of our company and I don't think it's the case for our industry at all."

One of the industries to give unqualified support for Mr. Harper's proposals is trucking, which would benefit from deeper ties with the United States. "Canada is the most dependent country in the world on one other country for its trade," said David Bradley, chief executive officer of the Canadian Trucking Alliance and president of the Ontario Trucking Association.

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"It's imperative that we have a seamless, efficient and secure border; otherwise direct investment will simply go where the goods are going, and that's the United States," he said.

Mr. Bradley said the Canadian industry has "clearly suffered" over the past couple of years because of strained Canada-U.S. relations. "Whether you agree with the U.S. government on everything or not, the fact of the matter is when they're your No. 1 customer, you find ways to be polite and friendly with them."

Closer ties with the United States will also get a sympathetic hearing in the oil patch, which is centred in Mr. Harper's Alberta. Jim Gray, 70, a veteran oilman with a history of weighing in on political issues, welcomed Mr. Harper's efforts to forge greater continental ties and to cut corporate taxes.

But he didn't expect the oil industry to lobby heavily for a better tax deal. "With unprecedented levels of high oil prices, we're keeping a low profile at this time, and I think that's appropriate."

He said Mr. Harper has transcended his western roots, and is making Ontarians take notice of the Conservative Party. But he, like businesspeople everywhere, is awaiting details of what Mr. Harper has in mind for shedding business subsidies.

"I think what he's talking about are these wasteful handouts that have been prevalent for the last 10 or 15 years where there's minimal or no return after very high levels of expectations."

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Allan Shaw, head of the council and chairman of the Shaw Group Ltd. a major manufacturer and developer in Nova Scotia, said most business people he talks to are calling for reduced taxes to stimulate the area's struggling economy, as Mr. Harper suggests, and they are hoping the federal election campaign will prompt those initiatives.

Mr. Shaw said businesses in the region are hoping issues such as regional development and closer ties with the United States will get attention during the campaign.

James Rajotte, an Edmonton MP and the Conservative industry critic, said the party is "open to lowering corporate tax rates, capital gains tax rates, small-business deductions, but obviously we'd like it to be revenue neutral so we'd like to reduce the amount of corporate welfare we see each year."

Mr. Harper's pronouncements came a day before the Conference Board of Canada weighed in with a timely report on foreign direct investment in Canada. On the surface, it backed the Conservative leader's initiatives for a lighter government economic touch. Canada is a less attractive destination for foreign investment and the Canadian business environment is unfavourable to investment, said the report, based on a survey of 100 executives of multinationals.

But tax and regulations, while considered important, were not the biggest factors holding Canada back. The companies cited such things as poor quality of employees, slowness in adopting new technologies, and the interior state of infrastructure in cities, highways and border crossings -- the kinds of things government can play a big role in improving,

In fact, survey respondents indicated that taxes were not a deterrent to investment. Forty-five per cent said Canada's taxation was favourable to foreign investment and only 16 per cent said it was negative. Government regulation and supervision of the market was seen by respondents as neutral to slightly negative in its impact.

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Still, all companies everywhere will tell you they want lower taxes, even in Atlantic Canada, which Mr. Harper once characterized as suffering from a dependency culture. The Atlantic Provinces Economic Council yesterday called for expansion of federal tax credits to encourage employers to locate in the area.

It's clear even the Conservatives are still trying to sort out the implications of Mr. Harper's remarks. Mr. Rajotte said that his party is committed to backing research and development but that he would like to see the process for funding "major science" projects simplified.

He points to the University of Saskatchewan's $174-million synchrotron project -- currently Canada's largest research machine -- that is funded by three separate organizations.

"We think the government has some good things in those areas . . . but they fund it in too much of a complex way," he said. "What we need is one agency minister . . . so it would be approved as a capital project and an ongoing project. Our message is we are willing to simplify it."

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