TORONTO - Ottawa and Ontario will spend up to $500 million to upgrade a Toronto-area commuter transit system as part of a federal strategy to combat the global economic slowdown, Prime Minister Stephen Harper said Tuesday.

After emerging from a green-and-white GO Transit train at a west Toronto rail yard, Harper touted the investment as part of a larger "action plan" to revive the country's troubled economy.

"Southern Ontario and the GTA have been hit hard by the slowdown, but it is still a bastion of our nation's economy and will remain so when the recovery takes hold," Harper said.

"That's why it is critical to keep the economy of this region thriving, to keep people working and to keep them moving."

The campaign-style stop, complete with Harper riding the rusty rails of a dead-end track with his new ally Premier Dalton McGuinty, seemed designed to win over disheartened Ontarians drowning in a sea of job losses and bad economic news.

The prime minister has been eyeing vote-rich Ontario, which has lost about 200,000 jobs in the past few years, as key to forming a long-sought majority government.

The $500-million investment, split between the federal and Ontario governments, will fund more than a dozen projects to improve the provincially run commuter system, Harper said.

But nearly half the money hasn't yet been allocated for specific projects, McGuinty acknowledged.

About $175 million will be spent on creating about 6,800 new parking spaces at 12 GO Transit stations, while $75 million will go towards rail upgrades at a junction in Hamilton, he said.

McGuinty defended the parking-lot project as helping to meet rising demand for commuter transit while creating construction jobs.

"It's a practical thing," McGuinty said.

"Moms and dads have been telling us for some time, 'You've got to build more of those darn spaces for us so we can leave our car there and use it."'

The two levels of government will continue to talk about where the rest of the money should be spent, McGuinty added.

"They've got an infrastructure spend that they want to make, we've got our own priorities here," he said.

"And we're looking to see that there is as much overlap as possible, so that we're building on common ground, so to speak."

McGuinty may have to wait a long time for that federal cash to flow, said Liberal industry critic Gerard Kennedy.

Only four per cent of the money promised by the Tories for infrastructure projects in the last fiscal year actually made it out the door, he said.

"If GO ran on the schedule that Mr. Harper does, we'd never get a train moving," he said.

Some 200,000 people in the Toronto area use GO Transit's network of buses and trains daily, which fans out to nearby cities such as Oshawa, Hamilton and Barrie.

The money is part of a joint plan announced last summer under which Ontario will match the federal government's $3-billion contribution for infrastructure projects.

The federal Tories have since announced plans to spend $40 billion over two years on measures to kickstart the economy, including infrastructure, social housing, home retrofits, railways and tourism.

In the process, Ottawa is expected to rack up deficits of $86 billion over five years - the first time in 13 years that Canada has plunged into red ink.