OTTAWA - Ontario's economic slowdown and the resulting job losses overshadowed the provincial Liberal Party's celebration of last year's election victory at their annual general meeting in Ottawa this weekend, with Premier Dalton McGuinty reminding delegates that some families are "hurting.''

The approximately 1,000 Liberals gathered for the meeting clearly were in a mood to celebrate their first back-to-back majority governments in 70 years, and emphasized that by giving McGuinty 95.4 per cent support in the automatic leadership vote that follows an election.

As delegates attended sessions on health care, education and the environment, McGuinty was already looking ahead to the next campaign, confirming that he intends to lead the party into the 2011 Ontario election and boldly predicting a third straight Liberal majority.

But the premier also spoke passionately about the impact the slowing economy is having, especially in Ontario's manufacturing sector where more than 200,000 jobs have disappeared in recent years.

"That's an important thing for us to remember, this business of us coming together and lifting each other up, because there are some Ontario families who need to be lifted up,'' he said. "They're hurting because there are challenges to our economy that are costing us jobs.''

McGuinty insisted his government's economic plan, which includes direct investments in companies, an emphasis on skills training and some corporate tax cuts is much more effective than the Conservatives' "naive'' emphasis only on slashing taxes, and said he was prepared to make changes.

"We need to demonstrate some flexibility if that's called for, and we'll wait and see where that takes us,'' he told reporters. "We need to have the right plan for the times and if the times change that might require that we make some changes to our plan.''

But McGuinty wouldn't be more specific about his flexibility, and even got a little testy when reporters asked if that could mean raising taxes to pay for government programs if provincial revenues drop drastically. He finally said no one supports increasing taxes during times of economic challenges.

"I'm not going there. I think flexibility is an important characteristic of a responsible plan,'' he said. "I'm not going to go beyond saying what that might look like. We'll just wait and see.''

But Progressive Conservative Leader John Tory, who was also in Ottawa during the weekend, said McGuinty and the Liberals were "adrift'' without a solid economic plan, and were showing a level of arrogance that would make it easier "to take them down'' in the next election.

"The arrogance and complacency with respect to the economy, where thousands of people are losing their jobs, and they say, `Steel yourself, this too shall pass,'' said Tory. "I think people will be totally fed up within 18 months from now on the lack of leadership on the economy.''

McGuinty fired back by calling Tory's call for more tax cuts "simplistic,'' and defended his government's decision to give companies hundreds of millions of dollars to invest in Ontario, even if some of them, like General Motors, turn around and lay off workers.

"Some people feel you should stand back and sit on your hands and let the economic forces to play themselves out. I don't buy that,'' he said.

"There are many variables that drive the economic change that's taking place, and that's why we have a comprehensive plan and will continue to drive that plan.''

McGuinty heads to California Monday for a three-day trade mission, but won't be meeting with Gov. Arnold Schwarzenegger, who managed to upstage the premier during a visit to Ontario last year.

"I couldn't believe the size of the crowds that I was drawing when I was with him,'' joked McGuinty.