Prime Minister Stephen Harper unveiled a billion-dollar aid package on Thursday aimed at supporting Canadian communities hit by economic upheaval.

Each province will get $10 million in base funding, while territories will each receive $3 million, Prime Minister Stephen Harper said Thursday.
(CBC)

Flanked by New Brunswick Premier Shawn Graham, Harper made the announcement at a lumber mill in the town of Tracyville, N.B., south of Fredericton. Hours later, the premiers of Ontario and Quebec panned the deal, as did union leaders.

Harper said the government will establish a community development trust fund, which will be used to support worker retraining and skills development, and community transition.

Each province will get $10 million in base funding, while territories will each receive $3 million, Harper said. The remaining money in the trust will be divided among the provinces and territories on a per capita basis.

"The program is aimed at one-industry towns facing major downturns, or communities plagued by chronic high unemployment, or regions hit by layoffs across a range of sectors," Harper said.

The aid will help the forestry sector, which has been pounded by several factors, including the downturn in the U.S. housing market and the rise in the Canadian dollar.

The Canadian Forest Service of Natural Resources Canada estimates that more than 22,000 jobs have been lost at 184 mills across the country between January 2003 and April 2007.

"These are indeed difficult times for the forestry industry, workers and communities right across Canada," Graham said, noting the aid will amount to about $30 million over three years for New Brunswick.

"Forestry has long been the engine that drives the New Brunswick economy, and the recent downturn has hurt our province."

The aid will also extend to other industries, such as the manufacturing sector in Ontario. The rising Canadian dollar has made Ontario's exports less competitive, while a weakening U.S. economy and high energy costs have also affected the sector.

Aid package needs parliamentary approval

The aid package is new spending and will require passage by Parliament, Harper said.

Soon after his announcement, the premiers of Quebec and Ontario said the deal does not go far enough. They said Canadians should not have to wait for the money to be approved by Parliament to get relief.

"The assistance is on condition of the passage of a budget," Ontario Premier Dalton McGuinty said at a joint news conference in Ottawa with Quebec Premier Jean Charest.

"I think that all Canadians understand the urgency of the need to come to the assistance of the manufacturing sector," McGuinty added. "If we're really talking about an emergency situation, it seems to me that the assistance that is being contemplated should be provided immediately or on an emergency basis."

McGuinty said his government has already provided $3 billion in emergency aid to Ontario's ailing manufacturing and forestry sectors. The federal aid announced Thursday will only provide Ontario with about $350 million extra, he said.

Charest said the government of Quebec has given its ailing industries about $2 billion in support, while the federal money will only amount to $200 million for Quebec.

"Just look at the proportion there," he said. "We're talking about $200 million compared to $2 billion. That's 10 per cent effort compared to what we've already done. It's simply not adequate."

'An attempt to blackmail'

Buzz Hargrove, president of the Canadian Auto Workers union, said the aid simply is not sufficient, while Dave Coles, the president of the Communications, Energy and Paperworkers Union of Canada, slammed the announcement.

"There is nothing that even acknowledges the crisis in the forest sector," he said. "This is simply an attempt to blackmail the other political parties into voting for the budget."

The Forest Products Association of Canada, which is an industry group, said it welcomed the government aid, but called on the prime minister and the provincial and territorial leaders to develop a plan to foster growth in the sector.

Hargrove, the heads of the province's automakers and the Canadian Vehicle Manufacturers' Association met Thursday with McGuinty to press the premier to ask Harper for more aid when the first ministers meet Friday in Ottawa.

But senior Finance Department officials said Thursday that the federal government will not be announcing more aid at the first ministers' meeting. 

"We're not going to have a program that stops shrinkage in the manufacturing sector in Canada when it's shrinking in every other country," said one official, speaking on condition of anonymity.

The finance officials said manufacturers around the world are being caught in a squeeze from the increasingly fierce competition from developing economic giants, such as China and India.

With files from the Canadian Press