TORONTO - The Liberal government has brought fairness to a damaged property-tax system left behind by the previous Conservative government, party leader Dalton McGuinty said Friday as he announced plans for a grant of up to $500 a year for home-owning seniors.

Despite widespread complaints about soaring assessments that have made it difficult for many seniors on fixed incomes to remain in their homes, McGuinty denied he was tinkering around the edges.

"The Conservatives made a heck of a mess of it over the course of eight years,'' he said. "We're brought, finally, some real stability and predictability and fairness to the property tax system.''

Under the proposal, single seniors who own their own homes and make less than $35,000 a year would get the full grant of $500, as would couples making less than $45,000.

Singles earning more than $50,000 or couples more than $60,000 would not qualify.

The cost to the provincial treasury would be about $250 million.

The announcement was greeted warmly by Dante Mario Guevara, 72, a retired butcher who lives with his wife, 56-year-old Maria Abruzese-Guevara, in a modest condominium in this sprawling suburban city just north of Toronto.

"They help the poor people, they help the middle class, and they help the old people,'' Guevara said."That's why we are Liberal.''

McGuinty's main rival in the Oct. 10 election, Progressive Conservative Leader John Tory, is promising a five per cent annual cap on property assessments to protect seniors.

Tory said seniors are being punished by skyrocketing assessments.

But McGuinty said his government has ensured that assessments are only done every four years, and any hikes are phased in over that period to cushion the shock of an increase.

At the same time, any decrease in assessment is implemented right away, he said.

"We think it's fair, it's reasonable and it's realistic.''

Earlier in the day, McGuinty told Toronto radio station CHUM-FM he would like to see some of the huge federal surplus spent in Ontario to improve public transit and to create jobs.

Prime Minister Stephen Harper said Thursday that Ottawa has put all of a huge $13.8-billion surplus towards paying down Canada's debt.

McGuinty said Ontario could use some help with a $17.5-billion investment the government wants to make in public transit. McGuinty said traffic gridlock not only inconveniences families, it hurts the economy.

He also said he would like to see some of the federal surplus used to help create jobs in the hard-hit manufacturing sector, which is facing "real challenges.''

Harper said Ottawa is passing the savings on interest payments to taxpayers in the form of continued cuts to personal income taxes.