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Ontario Premier Kathleen Wynne speaks at the Ontario Liberal Partyâs 2014 Heritage Dinner in Toronto, Thursday March 20, 2014Mark Blinch/The Globe and Mail

Ontario Premier Kathleen Wynne is pledging $2.5-billion in new grants to attract more businesses to the province and help others expand.

The 10-year Jobs and Prosperity Fund, announced Monday, will be contained in this week's budget, which could trigger an election.

"In a fiercely competitive world, we cannot be idle. We have to be willing to compete," Ms. Wynne told a business lunch in Toronto. "We need to be aggressive and creative in striking partnerships that are in the short and long-term interests of the people of Ontario."

The fund will serve to sharpen the contrast between Ms. Wynne and Progressive Conservative Leader Tim Hudak, who has derided handouts to companies as "corporate welfare." A Tory government, he has said, would stop doling out such grants and instead cut taxes and red tape to attract investment.

Ms. Wynne argued that Ontario needs to provide the funds to keep the province competitive with other jurisdictions that dole out even larger sums.

The Liberals control only a minority of seats in the legislature, meaning the province will face an election if the PCs and the New Democrats team up to defeat the budget.

The NDP hasn't criticized grants for businesses to the same degree, but has pushed the government to attach more strings to them to ensure recipients create jobs in exchange for the cash.