TORONTO - Ontario will continue to project "modest'' surpluses for the next two years when the Liberals table the budget on March 25, their first since winning a second mandate, Finance Minister Dwight Duncan said.

The budget will be used to strengthen the province's economy, which has been hurt by a downturn in the manufacturing sector, Duncan said in a statement announcing the date of the budget.

Despite some gloomy projections, Duncan said the Liberals are still on track for a $750-million surplus.

Before entering a cabinet meeting on Wednesday, Duncan said growth had exceeded expectations this year, both in the economy and in government revenues.

"We will be prudent in our growth estimates . . . but we will be projecting a continued modest surpluses in each of the next two years,'' he said.

The budget, the first for the Liberals since their re-election in October, will invest "in what matters most to Ontarians,'' Duncan said. The goal is to "further strengthen Ontario's economy,'' Duncan added.

Premier Dalton McGuinty has hinted the budget will help fill the gap left by the federal budget, which his government has complained does little for the province.

He has suggested that may involve an initiative to help laid-off workers train for new jobs because he said they're being shortchanged by the Employment Insurance program.

The coming budget has been a bone of contention between the federal Conservative government and the provincial Liberals, whose ideological differences over the economy have erupted into a war of words in recent weeks.

Federal Finance Minister Jim Flaherty has publicly urged McGuinty to cut corporate income taxes to make the province more competitive and attract investment. Failing to do so would show a lack of leadership on the part of the Liberals, Flaherty has said, adding Ontario's current tax rate makes it the "last place in Canada'' to start a new business.

The Liberals are cutting business taxes but they aren't going to slash them at the expense of funding for health care, education and social services, McGuinty has said.

But Progressive Conservative Leader John Tory said it's clear that kind of approach isn't working.

"If they were, we wouldn't have people leaving the province in record numbers, jobs being lost in record numbers and unemployment consistently above the national average,'' Tory said.

The Liberals have to use this budget to reduce taxes on both people and businesses, as well as cutting red tape to encourage investment, he added.

"This is a very serious situation and I see very few signs that they've woken up to that reality,'' Tory said.

New Democrat Andrea Horwath said the budget has to contain a real plan to address the "jobs crisis'' facing Ontario. As a representative from Hamilton -- a traditional manufacturing centre -- Horwath said she's seen the devastation of pink slips and factory closures.

"The lifeblood is draining from too many communities across Ontario,'' Horwath said. "(The Liberals) have done nothing on this file. They've sat back and said 'There is nothing we can do, it's global forces.' There are things that they can do.''

The Liberals need to start with a manufacturing investment tax credit and a "buy Ontario'' plan that ensures public spending on transit and municipal infrastructure projects is used to sustain manufacturing jobs in Ontario, she said.

The Liberals also need to get back into the business of building real affordable housing and reducing poverty, she added.