TORONTO - An economic development agency for beleaguered southern Ontario will do little to create jobs and is likely to become an exercise in "pork-barrel politics," critics said Wednesday, despite Premier Dalton McGuinty's enthusiasm about his province's share of the federal budget.

"Regional development amounts to corporate welfare and the government is terrible at picking winners and losers in business," said Kevin Gaudet, Ontario director of the Canadian Taxpayers Federation.

"The organizations usually amount to nothing more than pork-barrel politics and throwing cash at businesses that tend to be friends of government."

Tuesday's federal budget included a $1-billion investment over the next five years to deal with job losses in the manufacturing sector through the creation of a southern Ontario development agency-- an element McGuinty praised as one of several areas of "significant progress" for the province.

"This prime minister has actually delivered. I'm not going to look this gift horse in the mouth -- this is real, it's meaningful and it's coming here just in time," McGuinty said.

"This is a time when we're taking a shellacking in the manufacturing sector in southern Ontario."

The province has shed more than 200,000 manufacturing jobs in recent years.

Ontario's finance minister also applauded the move, noting Ontario didn't have a regional development fund.

Critics pointed to failings in similar agencies -- most notably the Atlantic Canada Opportunities Agency -- which Prime Minister Stephen Harper criticized when he was in opposition.

"I don't see any case for optimism when I look at the experience of other development agencies like ACOA," said Jim Milway, executive director of Ontario's Institute for Competitiveness and Prosperity -- an arm's length agency funded by the provincial government.

"It would be nice if the feds could give us some proof that these things are good investments of taxpayers' dollars, and I don't think that case has been made."

Tax reductions and relevant infrastructure investments, along with a reduction in employment insurance premiums, would be a much more effective way to create jobs, he said.

Ontario will get an additional $1.2 billion annually after this budget, when about $350 million in equalization payments and $820 million in health transfers are factored in, said Gaudet, who added he's worried about how the money will be spent.

"This is a recognition of the Ontario government's failure to put in place the appropriate tax structure and competitive policies that help Ontario businesses," he said.

"This should be an important condemnation of the economic policies of this provincial government."

The stimulus package comes with delays that will translate into more lost jobs with money possibly not flowing until 2011, the same year as the next provincial election, said NDP Leader Howard Hampton.

"That would be my fear, that this would be turned into some other pre-election slush fund just as the McGuinty government has used the Northern Ontario Heritage Fund as a pre-election fund."

The federal budget also includes $7 billion in new cash for infrastructure spending on things like roads, sewers and universities.

Much of the spending will require matching funds from the provinces, municipalities or other partners, and McGuinty said he'll work with those levels of government to get shovels into the ground as quickly as possible.

"(Ottawa) issued us a $5-billion-plus bill and traditionally that would have been met with resistance and resentment," McGuinty said.

"But these are extraordinary times. We're going to have to find a way to come up with that money."