Ontario gets federal handout as industry pinched
By Frank Pingue
TORONTO (Reuters) - Ontario will receive its first-ever handout from a federal program designed to help poorer provinces as the global financial slowdown crimps demand in its key manufacturing industries.
Canada Finance Minister Jim Flaherty said after a meeting with his provincial and territorial counterparts on Monday that Ontario will receive C$347 million ($292 million) next year under the C$14.2 billion national equalization program.
It will mark the first time that Ontario, the most populous and industrialized province in Canada, will receive funds under the program -- a sign the province's once booming manufacturing sector is cracking under the weight of the global financial crisis.
"I don't rejoice at this. The reality is that Ontario is entitled to enter the program and will be receiving substantial funds next year. Regrettably, I expect that Ontario will be in the equalization program for some time to come," Flaherty told reporters after the meeting.
Ontario's auto industry has been at the center of the province's manufacturing slowdown, hard hit by weakening U.S. demand, high energy prices and a strong Canadian dollar that have prompted a deterioration in revenues.
Flaherty, a former Ontario finance minister, said that a dramatic transformation is taking place in the auto industry, where thousands of jobs have been lost since 2002.
Flaherty said it was an "odd feeling" to see Ontario, Canada's economic hub, facing difficulties that would put it on the receiving end of federal payments meant for poor provinces.
With changes to the funding formula, future payments under the equalization program will grow at a "sustainable rate" based on economic growth, Flaherty said. Continued...