Premier Shawn Graham announces the provincial and federal governments will invest $18 million into the Irving-owned New Brunswick Southern Railway. Conservative cabinet minister Greg Thompson (left) and Jim Irving (right) also attended the news conference in McAdam, N.B. (CBC)

The Irving-owned New Brunswick Southern Railway is getting $18-million from the federal and provincial governments to upgrade the rail service.

New Brunswick Southwest MP Greg Thompson and Premier Shawn Graham used the historic McAdam train station in southern New Brunswick as a backdrop to announce the infusion of public money into the company owned by the powerful industrialist family.

Jim Irving, president of New Brunswick Southern Railway, said the $18-million in government grants will account for half of the company's total upgrades to its tracks, rail beds and bridges along its routes.

Irving said the project will create 35 to 40 jobs over the next two years. As well, the company's president said the announcement will translate into an estimated $10.6 million worth of wages and benefits over the life of the project.

The railway stretches from Saint John to Brownville Junction, Maine, and from McAdam to St. Stephen, N.B.

The money will also be used to upgrade the rail terminals in McAdam and west Saint John.

Thompson, who is the veterans affairs minister, said it's important to keep people working during tough economic times.

"Stimulating our economy and keeping people working during these tough economic times is a top priority for our government," Thompson said in a statement.

"Our government's support for the New Brunswick Southern Railway will increase transportation efficiency, create jobs, and inject additional capital into our economy."

Advocacy group opposes funding

Kevin Gaudet, the federal director of the Canadian Taxpayers Federation, said in an interview that the railway funding is "horrible news" for taxpayers, because it allows a profitable, private company to have an unfair advantage against other businesses.

"Well, $[18] million in corporate welfare for Irving is a very expensive job creation program, and taxpayers are the ones being railroaded here," Gaudet said.

Instead of offering financial grants to corporations, he said governments should be implementing deep corporate income tax cuts to create new jobs in the current recession.

Gaudet was especially critical of the federal government's role in the funding announcement, because it will run a $50-billion deficit this year. The advocacy group director said Ottawa should not be saddling future generations with these hefty deficits.

"We consider it fiscal child abuse when our kids will have to pay off these silly wastes of taxpayers' money," he said.