P.E.I. Finance Minister Wes Sheridan will be watching this week's federal budget for signs of what Ottawa intends to do with labour development money it passes on to the provinces.

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Wes Sheridan will be reading the federal budget closely. (CBC)

The federal government transfers more than $2 billion a year to provinces to fund regionally-distinct skills training programs. But business leaders have been complaining about labour shortages in key sectors, and there have been suggestions Ottawa is looking for changes to see those problems fixed.

Those signs include a letter to MPs from Finance Minister Jim Flaherty saying themes in the budget will include matching skills training programs with available jobs.

Sheridan said the money needs to stay local.

"We feel very strongly that the province is much more capable of running that program in a skilled way than bringing it back to a centralized format," he said.

Flaherty's letter also talks about investing more in infrastructure. The current federal infrastructure funding program ends in 2014.

"Municipalities are certainly looking for that," said Sheridan.

"We would be surprised if there is not something mentioned inside that budget."

The third major theme of the federal budget will be supporting value-added jobs in manufacturing, according to Flaherty's letter.

The budget comes down on Thursday.