TORONTO - It makes more economic sense to bring in a home renovation tax credit for seniors than it does to take the provincial portion of the HST off home heating, Ontario Premier Dalton McGuinty said Tuesday.

The New Democrats say their first order of business when the legislature resumes next week will be a private member's bill to take the eight per cent provincial tax off home heating bills.

The Tories campaigned on the same HST cut, and the two opposition parties combined have one more vote than the Liberals. But even if they get the bill passed second reading, it likely won't become law.

That's because the Liberals control which bills get called for third and final reading, and have said they won't call up this one.

The home renovation tax credit will help seniors stay in their homes and create jobs for builders who do the renovations, such as building ramps and making other changes to make a home more accessible, said McGuinty.

"Our preference is our healthy home renovation tax credit (because) it helps seniors stay in their homes -- which is exactly what they want to do -- it acts as economic stimulus and it will reduce the cost of health care in Ontario," he said.

"That's a pretty sweet spot when we can achieve three overriding public policy objectives at the same time."

The New Democrats said they weren't convinced McGuinty would kill the bill to provide some HST relief from home heating bills.

"I'm not sure he's rejected it -- he danced around it a little bit -- but I think there will be sufficient support in the House to see it through if the Conservatives support the motion," said NDP critic Michael Prue.

"There is always that government prerogative of not calling it for third reading, but we are in a (minority) House where there are going to have to see some support from us."

In an earlier speech to the Economic Club of Canada, McGuinty talked about "living in times that call for greater restraint," and said the Liberals' top priority would be to create jobs and grow the economy.

"It's going to require discipline and some tough decisions on the part of government," McGuinty warned the 500 business people.

"We're going to have to take other measures, including controlling government costs."

The Liberals have vowed to reduce the size of Ontario's public service by five per cent by next March and by seven per cent by 2014.

McGuinty also confirmed Ontarians will find out next week how the province's economy is doing and how the slowdown is impacting the government in the fall economic update Nov. 23.

The government has already said the update will show a $16-billion deficit for this year, but Finance Minister Dwight Duncan warned that growth forecasts are being revised downward almost weekly, and are much lower than his projections in the spring budget.

"At the time of the budget we thought it was about 1.4 per cent," Duncan told reporters.

"We now think it's about one per cent, but it points to the fact there are difficult choices ahead."

Just what those difficult choices are neither Duncan nor McGuinty is willing to say just yet.

McGuinty wants the government to follow a recommendation from economist Don Drummond to limit growth in spending to one per cent a year until the deficit is eliminated in six years.

That's going to mean cuts in areas other than health and education, but just what services will be reduced or eliminated won't be revealed until next spring's budget.

The Liberals used last year's fall economic update to announce a $1-billion plan to cut electricity bills by 10 per cent, but there won't be a similar move this year, cautioned Duncan.

"There won't be that much detail this time," he said.

"We'll be updating numbers and speaking about the next budget, more than the last budget, so there won't be an initiative on that order of magnitude."

Next week will be busy at the legislature, which will start with the election of a Speaker on Monday and the Liberals' throne speech on Tuesday. The economic update is slated for Wednesday.

The legislature hasn't sat since it recessed last June, and will be returning with a minority government for the first time in a generation.