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OTTAWA (Reuters) - The Canadian government plans to set up a C$1 billion ($990 million) trust fund to help unemployed workers and communities hard-hit by global economic turmoil, Prime Minister Stephen Harper said on Thursday.
But in a challenge to opposition parties, Harper said the aid plan was dependent on the minority Conservative government's next budget being passed by Parliament. The budget is expected in early March and, if the government is defeated, an election will be triggered.
Ottawa is under increasing pressure to help workers in the forestry and automobile industries, which have been hit hard by the strong Canadian dollar and weakening demand in the United States, Canada's main trading partner.
Harper said the initiative was aimed at single-industry towns or regions with heavy layoffs across a broad range of industries.
"This fund will help vulnerable communities and their workers to adjust to these changes and to prosper," he said in a speech at a lumber mill in the eastern province of New Brunswick.
Harper is due to meet the premiers of Canada's 10 provinces and three territories for dinner in Ottawa on Friday, for a conversation expected to focus on the economy.
Harper -- who won power in the January 2006 election -- said last month he expected the fallout from the weakening U.S. economy to hit Canada.
"Our government will support provincial and territorial efforts to build a stronger and more prosperous future for communities and workers who have been hurt by current economic volatility," he said on Thursday.
The Forest Products Association of Canada welcomed the news but said Harper and the premiers needed to give more help to an industry that employs 300,000 people.
The Communications, Energy and Paperworkers Union slammed the fund as a useless political gimmick which had no money specifically dedicated to the forest industry.
"Our union, our membership, our communities are outraged at this frivolous announcement ... our industry is bleeding. This isn't even a Band-Aid, it's not a stitch," union president Dave Coles told the Canadian Broadcasting Corp.
Opposition parties accuse the federal government of not doing enough to help troubled industries. Stephane Dion, leader of the Liberal Party, has recently hinted he might end his practice of backing the government on confidence votes.
Harper said the fund, which would have a three-year life span, would be "financed through a one-time allocation from this year's surplus and is therefore dependent on passage of the budget this spring."
The Conservatives are confident they can win the next election and, if the budget were defeated, would no doubt relish campaigning on the fact the Liberals had voted against the aid package.
Polls indicate the most likely result of an election now would be another minority Conservative government.
Additional reporting by Louise Egan; editing by Rob Wilson