Premier Dalton McGuinty simultaneously acknowledged problems in Ontario's economy and defended his government's efforts to solve them as he kicked off an emergency debate at Queen's Park.

"I want to reassure Ontarians that just as previous generations faced and overcame their challenges, we will overcome ours," he told the legislature on Wednesday.

McGuinty said while there have been "severe job losses" in the manufacturing sector since 2002 -- at least 200,000. The forestry sector has also seen heavy job losses, he said.

"We've created many more jobs than we've lost, but that's little consolation to Ontarians who have lost their jobs," he said.

McGuinty outlined some of his government's measures for getting the provincial economy back on track:

  • Creating ministry of research and innovation ministry in 2005
  • A $205-million venture capital fund and a 10-year tax exemption on the commercialization of Canadian-originated ideas
  • Beginning the reinvestment in Ontario's infrastructure and public transit, with thousands of construction jobs being created
  • The "reaching higher" plan to fund post-secondary education and a plan to help laid-off workers start second careers
  • Cuts in business taxes and a move to harmonize corporate tax collection with the federal government, something that will save Ontario businesses money

"We have invested $500 million in the auto sector to generate 7.5 billion in new investment and thousands of jobs," he said. "Yes, we've lost jobs. But we will keep fighting for more. The auto sector has a bright, green future in Ontario and we are eager to help build that future."

The motion calls on the legislature to affirm "our strongest possible support for Ontario workers, and families, and for a healthy, growing economy by continuing to implement the five-point economic plan that includes: investing in the skills of our people, making targeted tax cuts, investing in research and innovation, investing in infrastructure, and partnering with businesses, while also expanding trade ties within Canada and internationally and seeking fairness from the federal government for Ontarians."

Before the debate began, the opposition said the resolution being debated is something that praises the government's policies and that taints the exercise.

"In my view, when people are losing their jobs, they're worried about losing their homes, they're worried that their savings are disappearing, for him to engage in gamesmanship like this is a damned disgrace," said Progressive Conservative Leader John Tory.

"The government has pre-determined what the outcome of this debate is going to be," the NDP's Gilles Bisson told reporters. "Let's say what this is: This is a communications strategy on the part of a government who is having problems responding to what's going on in the economy for the past four or five years."

The NDP and Tories both indicate they will vote against the motion, but the Liberals have a substantial majority.

Flaherty

Earlier Wednesday, federal Finance Minister Jim Flaherty, who represents the Ontario riding of Whitby-Oshawa, told a news conference in Toronto that Canada is well-positioned to cope with the financial crisis sweeping the globe.

But he suggested the federal Conservative government is prepared to change course if conditions worsen. "We'll do what we have to do so long as we remain economically prudent," Flaherty said.

"We're sure not going to run a deficit. Absolutely not," he said, without specifying what the government's contingency plan might be.

Earlier this week, Ontario's Finance Minister Dwight Duncan said he couldn't rule out future deficits if the provincial economy continues to worsen.

The provincial government will table its fall financial statement on Oct. 22.

Flaherty is to meet with other G-7 finance ministers in Washington on Friday.

Canada's, Ontario's economies

Flaherty pointed to a Tuesday International Monetary Fund report that predicted Canada's economy would grow 1.2 per cent in 2009, leading all G-7 economies.

The U.S. is to only grow 0.1 per cent and Europe 0.2 per cent.

However, Ontario's economy is highly reliant on exports to the United States.

RBC said in a report released Wednesday that Ontario would experience zero economic growth in 2008 and only 0.5 per cent growth in 2008.

Along with a sagging export market, the report said cracks are appearing in Ontario's domestic economy.

"Provincial employment has recently taken a hit; housing markets are cooling rapidly; and the residential construction sector has become extremely volatile -- with the majority of activity taking place on the multi-unit side," it said.

"If negative sentiment continues to spread, these cracks could widen further, testing the resilience of other strong-performing sectors like consumer spending," it said.