Ontario's politicians started jockeying for position Monday ahead of the government's fall economic statement, with the opposition attacking Premier Dalton McGuinty for giving away scholarships to foreign students.

"… Instead of providing relief to families of Ontario and their daughters and sons, you're giving away $40,000 a year to which Ontario students cannot apply," said Progressive Conservative Leader Tim Hudak during question period.

"We would change that – put Ontario students first. Mr. Premier, will there be some kind of relief for Ontario families in your economic statement?"

According to a government news release issued last week, the scholarship is aimed at luring foreign students to carry out their doctoral studies in Ontario. Seventy-five students will get up to $40,000. The program is estimated to cost $20 million in the first four years. Participating universities will put up another $10 million.

"Offering scholarships to the world's brightest students will help Ontario universities compete with top international universities," the release said. "This will help keep Ontario at the forefront of the global knowledge economy and strengthen academic, cultural and business ties with key markets around the world."

Premier Dalton McGuinty, who didn't directly address Hudak's question, gave a preview of the good news he hopes to be highlighted in the update.

"Since the depths of the recession, the American economy has recovered 10 per cent of jobs lost. The Ontario economy has recovered 76 per cent of jobs lost," he said.

"We have some specific plans in place to help create new jobs. That includes our investments in clean, green, renewable energy."

In the latest Statistics Canada labour force survey, Ontario's unemployment rate was pegged at 8.6 per cent -- in part because the labour force shrank.

TD Economics said Ontario was still 57,200 jobs below its pre-recession peak. The province's manufacturing sector got hammered by the recession and that is delaying full recovery, it said.

Goods production accounts for just under one-quarter of Ontario's economic output.

Ontario's economy is dependent on exports to the United States. That country is the destination for 80 per cent of Ontario's exports. The unemployment rate there has hovered around 9.6 per cent since May. Before the recession began, the U.S. unemployment rate was about 6.7 per cent.

Finance Minister Dwight Duncan will deliver the province's economic update on Thursday. The update comes annually about half-way through the province's fiscal year, which begins on April 1.

This will be the first update since the province's HST began on July 1. That set the province's combined federal-provincial value-added tax at 13 per cent, but was accompanied by income tax cuts and adjustment payments.

In the quarterly update for the period ending June 30, the government reported it appeared on track to meet the $19.7-billion budget deficit predicted in the 2011 budget.

With a report from CTV Toronto's Paul Bliss