There were signs of a thaw in the often-frigid relations between Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty in a joint, $709-million announcement Thursday.
  
A news release from the two levels of government said the federal funds would be used to set up three trusts in Ontario for community development programs, public transit projects and to recruit more police across the province.
  
The community development trust gives Ontario $358 million for programs that improve productivity and competitiveness such as new technology and training for workers, and will help communities facing challenges in the agriculture, forestry and manufacturing sectors.
  
The public transit capital trust provides $195 million in new federal funding that Ontario will use to help pay for its large-scale transit plan called MoveOntario 2020.
  
There will also be a joint federal-provincial study for a commuter rail line between Toronto and Peterborough, which will also look at accelerating the extension of the GO Transit line from Lakeshore East to Bowmanville and to launch regular GO bus service to Peterborough.
  
Another $156 million in federal funds will go to recruit more police officers in Ontario over the next five years, part of Ottawa's initiative to recruit 2,500 new police officers across the country.

Stark contrast

The statement from Harper was in stark contrast to the harsh criticism his Conservative government has levelled against Ontario's tax policies in recent weeks, especially from Finance Minister Jim Flaherty, who warned Ontario was the last place in Canada anyone would want to invest.
  
"Our government is committed to the federalism of openness, an approach to federal-provincial relations that relies on respect for jurisdiction and productive collaboration to get things done for Canadians," Harper said in Thursday's release.
  
"I want to congratulate Premier McGuinty and his government for developing programs that will use these federal funds to strengthen the Ontario economy."
  
McGuinty's statement talked about Ontario's different approach to the economy, in which it invests in infrastructure and skills training, but also said the provincial Liberal government would continue to reduce taxes.
  
"Our plan will continue to reduce taxes while investing in innovation and forming key economic partnerships, stimulating investment and job growth," said McGuinty.
  
A spokesman for McGuinty said the premier hoped the new trust funds were a sign that the two governments can move beyond their disagreements over tax policies and work together in other areas.