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Tim Hudak, leader of the Progressive Conservative Party of Ontario, held a press conference Jan. 13 2014, at the Ontario legislature to talk about his plans for employment.Fred Lum/The Globe and Mail

The Progressive Conservatives say Ontario should reject Chrysler's request for public money to help expand its operations, characterizing the auto giant as holding the province "hostage" and demanding a "ransom" from taxpayers.

Tory Leader Tim Hudak came out swinging against what he termed "corporate welfare" Monday, arguing the province must end its practice of using the treasury to help big corporations.

"Should we pay a nine-figure ransom to Chrysler? Of course not," he told reporters. "We should use the money to lower taxes so all companies can create jobs, not handouts for the very few."

Chrysler CEO Sergio Marchionne is offering to beef up plants in Windsor and Brampton if the provincial and federal governments will help pay for it. He has hinted his company will look to invest elsewhere if it doesn't get what it wants. He is prepared to sink $3.6-billion into the province, and is seeking $700-million or more in public funds.

A Chrysler spokeswoman said the company would not comment on Mr. Hudak's position.

Premier Kathleen Wynne contends the province does not have much choice but to use tax money to lure private investment, given that Ontario is competing with other countries and provinces that are dangling cash in front of corporations.

"The reality of that environment is competing with other jurisdictions that are working in partnership with business to invest in the future," she said in the legislature. "I don't understand why any leader of any party in this province would think it was a good idea to walk away from the auto sector, to make a decision that would put at risk literally hundreds of thousands of jobs."

Economic Development Minister Eric Hoskins said government officials are in constant contact with Chrysler. His ministry is looking at the company's request and doing "due diligence" – examining the corporation closely to assess how well a deal would work.

"This is an important investment, so we're working hard to, hopefully, result in a decision where Chrysler will make this investment," he said in an interview.

The Tories, however, argued that creating a more attractive business climate by lowering electricity rates, cutting taxes and simplifying rules for companies would naturally result in more enterprises setting up shop, without the need for government money.

"If we had a level playing field for everybody, we [wouldn't be] held hostage all the time," economic development critic Jane McKenna said.

Mr. Hudak warned the province has already set a dangerous precedent by giving money to technology company Cisco and making a major green-energy deal with a consortium led by Samsung. Ontario would only encourage more companies to "come to the trough" if it agrees to Mr. Marchionne's request, he said.

"You give money to Chrysler, well then what about Ford? You give money to Cisco, then surely IBM's going to come to the trough next," he said.

New Democratic Leader Andrea Horwath said she is in favour of using tax dollars to attract corporations, but only if the government receives "ironclad" guarantees the company will create a specific number of jobs for a particular amount of time.

"I think people understand the need to keep good jobs here and the need to partner with business to keep those good jobs here. But I think what people expect though is that there are some guarantees those jobs stay," she said.

With a report from Greg Keenan.

Editor's note: A previous version of this article said incorrectly that Chrysler is looking to spend $2.3-billion expanding its operations in Ontario. The correct figure is $3.6-billion.