Ottawa has cut cheques for more than $1.5 billion to Ontario to help improve transit and phase out coal-fired power for the province's 12 million people.

The feds are putting up $962 million -- matched by money from other levels of government -- to push one of Toronto's subway lines northwest to the suburb of Vaughn, and to improve transit in other Toronto suburbs.

Another $586 million goes to help Ontario build an east-west electrical grid to Manitoba, allowing it to import relatively clean hydroelectric power and move away from coal-fired power plants.

"This is about cutting the commute, boosting the economy and improving air quality,'' Harper said Tuesday.

Ontario Premier Dalton McGuinty, federal Finance Minister Jim Flaherty and Flaherty's provincial counterpart Greg Sorbara were beside Harper as he spoke.

"(We've) put forward something that we think is desired and fits the priorities of ordinary working families. If that has political benefits, so be it.''

The money will help build six new stations along the Spadina subway line, northwest to the centre of Vaughan -- including a much-needed stop at York University. The expansion is expected to take seven years.

The money will also fund rapid transit projects in Mississauga and Brampton, and improve transit service in Durham region. The Brampton project is set to begin in 2010.

Since the GTA has some of the longest commuter times in North America, the plan should also improve the lifestyles of those living there.

"The hours spent by men and women creeping to and from work is precious time away from their spouses and children, adding yet another strain on hardworking Canadian families," the prime minister noted.

On the green funding, Harper said: "This will assist the Ontario government it moves forward on phasing out the province's remaining coal-fired generating stations -- a goal, which once fully realized, will result in the reductions of millions of tonnes of carbon dioxide emissions."

"We're taking a co-operative, balanced approach to solving the environmental challenge of our time; that is: reducing the threat of climate change and air pollution while preserving the jobs and standards of living on which our citizens depend," Harper added, noting that all of Canada will benefit from the projects in Ontario.

Ontario Premier Dalton McGuinty was delighted with the announcement.

"And since we like to lay claim to the fact that Ontario is both the heart of Canada and the economic engine of Canada, this is certainly as well a great day for Canada,'' he said. "It's a great day for our environment and our economy.''

McGuinty had long complained that Ottawa shortchanges Ontario. But he met with Harper over the weekend for 90 minutes. After their discussion, McGuinty said the prime minister had a new appreciation for Ontario's concerns.

Ontario expects the closure of coal-fired power plants would result in reductions of up to 25 million tonnes of carbon dioxide emissions. In 2003, the provincial Liberals had promised to phase out coal-fire power by 2007. McGuinty has since moved that deadline to 2014.

Those five plants account for nine per cent of Canada's total greenhouse gas emissions.

Aaron Freeman of Environmental Defence, an interest group, applauded the move, saying, "We need an east-west grid to transport relatively clean sources of electricity to areas that are heavily reliant on dirtier sources."

Harper is expected to make another ecoTrust announcement in Manitoba in the near future.

Political reaction

On CTV Newsnet's Mike Duffy Live, Conservative House Leader Peter Van Loan said Tuesday's announcement was another example of the government acting on the priorities of Canadians.

For that reason, he hoped the opposition parties would support the next federal budget when it is delivered on March 19.

Ralph Goodale, the Liberals' house leader, said the previous Liberal government had announced $12 billion in infrastructure funding.

"In fact, the funding for most of this announcement was in the previous fiscal framework, so it doesn't take a new budget in order to do these things, because the money is already committed," he said.

People should know the Tories have said this will count towards the so-called fiscal imbalance. "Therefore, they're really doing some double-counting here," Goodale said.

The NDP's Joe Comartin said this particular issue won't determine whether his party votes to support the budget.

With a report from CTV's David Akin