January 27, 2009 / 9:54 PM / 9 years ago

Canada budget pledges cash for hard-hit sectors

OTTAWA (Reuters) - The Canadian government’s 2009 budget earmarks C$1 billion ($813 million) for an economic development agency for southern Ontario, the country’s once high-flying industrial heartland, as part of a spending package for industries and regions hit hard by the economic downturn.

Responding to a big loss of jobs that may never come back, especially in the automotive industry, Finance Minister Jim Flaherty said in his budget on Tuesday that the government will provide the cash over five years to establish the new Southern Ontario Development Agency.

Such agencies already exist to promote development in traditionally depressed regions in northern Ontario as well as Atlantic Canada, Quebec and the West. But once prosperous southern Ontario has been hit hard by the quick decline of the auto industry and other manufacturers.

The budget increases funding for those existing agencies and will provide C$50 million over the next five years to establish a new regional development agency for Canada’s North.

Altogether, Flaherty says his budget will offer C$7.5 billion in extra support for economic sectors, regions and communities. This figure includes money for the auto, forestry and manufacturing sectors and funding for clean energy projects, the budget says.

Among the programs are:

-- A two-year, C$1 billion community adjustment fund to support economic diversification in communities facing decline in local industries, such as forestry, fishing, agriculture and manufacturing.

-- A new C$1 billion five-year Clean Energy Fund that supports research, development and demonstration projects, including carbon capture and storage. The government says this fund will generate C$2.5 billion in investments over its life.

-- The C$2.7 billion in loans the federal government announced in December to aid General Motors of Canada and Chrysler Canada.

($1=$1.23 Canadian)

Editing by Jeffrey Hodgson

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