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Ontario Premier Dalton McGuinty speaks to the media during a pre-budget press conference on Feb. 21, 2012.Peter Power/The Globe and Mail

Ontario's government has introduced a budget that attempts to tackle the province's ballooning deficit while maintaining economic growth, but critics said it lacked any plan for real job creation.

Canada's most populous province is facing a dramatic downshift in economic momentum, one that has meant much lower growth projections in an era of high oil prices, a strong currency and weaker U.S. demand.

The government reiterated its commitment to eliminating the deficit by 2017-18, which would be at least three years later than other provinces. For every dollar of new revenues in the budget, it sees $4 of savings and cost-containment measures.

While a key message was the need for austerity amid slow growth, the budget was short on a long-term vision for Ontario, home to 40 per cent of the country's economic activity.

It's a contrast to the message given by the federal government, which is expected to emphasize that short-term pain will lead to longer-term gain in its budget Thursday, said Sonya Gulati, economist at Toronto-Dominion Bank.

"I don't necessarily think we got a lot of the long-term economic outlook," she said. "If you think about the Ontario economy going through a transformation, and it's no longer going to be a manufacturing-led economy, where is the growth going to come from? Something has to step in and take its place and I don't think we got a discussion of those transformations."

The provincial government announced it will create a jobs and prosperity council, though the announcement didn't say who will run it nor when it will start.

It expects 360,000 net new jobs by 2015 and the jobless rate to fall to 6.7 per cent by then, though it gave no details on what will generate the new jobs.

Ontario's current jobless rate is 7.6 per cent, and about 557,000 people in the province are out of work. That rate is much higher for youth, where the unemployment rate is 17 per cent, the highest since October, 2010, and the third-highest in the country.

NDP leader Andrea Horwath and PC leader Tim Hudak both said the budget does nothing to address the "jobs crisis" in the province.

The budget highlights how dramatically assumptions for the province's economic growth have changed in the past year. The government now sees GDP growth of 1.7 per cent this year, 2.2 per cent next year, 2.4 per cent in 2014 and 2.5 per cent in 2015, weaker than it thought last year. It also reduced its expectations for revenue growth and job creation in the coming years.

The weaker projections are in line with economists' reduced forecasts for the province. In the longer term, the provincial government sees only "modest" longer-term growth, levels which are similar to last month's Drummond report which pegged GDP growth at just 2 per cent.

To that end, "the status quo is not an option," the 304-page budget document said. "Given the impact of the recession and the ongoing uncertainty in the global economy, Ontario cannot rely on economic growth alone to balance the budget."

The key issue, in the coming days, will be whether credit ratings agencies buy the long-term plan. In December, Moody's put Ontario on notice, saying it might cut the province's rating if it doesn't get its fiscal house in order. Any downgrade would have serious consequences for Ontario, making it more expensive to borrow just as debt is growing.

"This is sufficient, in my view, to avoid the negative scenario of an imminent downgrade," said Sebastian Lavoie, an economist at Laurentian Bank. "I think they found a balance" between targeting the deficit without harming economic growth.

Compensation costs account for more than half of Ontario's program spending. Proposed wage freezes, backed with the new spectre of legislation to enforce them, will give investors certainty, he added.

The government's assumptions are in line with private-sector forecasts. The exception, he noted, is the view of the U.S. economy, home to 77 per cent of the province's exports. There, Mr. Lavoie sees the province's forecasts for U.S. growth of 2.6 per cent next year, as being too rosy.