It took several attempts, but the Ontario government has finally come up with an aid package that makes the province's beleaguered forest industry happy.

Premier Dalton McGuinty said yesterday that the government will provide $220-million over the next three years to offset the industry's cost of building and maintaining forest roads and to retroactively reduce the stumpages fees for harvesting wood on Crown land.

The forestry industry, which is the bedrock of the Northern Ontario economy, has been hemorrhaging jobs in recent years as it struggled with the higher-valued Canadian dollar, skyrocketing costs for electricity and stiff competition from low-cost offshore jurisdictions. The cost of delivering wood to mills in Ontario is about $55 a cubic metre, compared with a worldwide average of $35.

In the past year, mill closings put about 4,000 people out of work.

Mr. McGuinty said he hopes the aid package will make the industry more competitive with jurisdictions that have lower costs for energy and raw timber.

"We can't make a guarantee that there will be no more job losses," he said at Queen's Park. "But what we do believe is we have put in place now the necessary supports to ensure we can turn the industry around and put it on a more sustainable footing."

There are three parts to yesterday's announcement.

The government will contribute an additional $47-million annually for construction and maintenance of roads into forests. This is in addition to an earlier pledge for $28-million of support, for a total of $75-million annually.

Government support for forest roads was slashed in the late 1980s. In 1987, the province spent $41-million on roads but only about $5-million last year.

A $70-million refund in stumpage fees will be remitted to the industry next month.

Stumpage fees for poplar veneer and white birch will be reduced by $3-million a year for the next three years.

The government did not directly address the issue of high energy costs, but the Premier said that the recent extension of a price cap on Ontario Power Generation production will give the industry some certainty about its future costs.

Jamie Lim, president of the Ontario Forest Industries Association, praised the government for recognizing the forest sector needed to become more competitive. "This is absolutely a home run," she said.

Like Mr. McGuinty, she said she could not guarantee there would not be more layoffs or mill closings. "But what I can tell you is that [yesterday's] announcement definitely addressed key issues that were crippling us, so we're hopeful."

The Premier said the government recognized that earlier aid efforts had not been enough and that it had to enrich its aid package.

Last spring, in response to a task force report that said the forestry industry was in crisis, the government offered $350-million in loan guarantees.

In September, it offered help on forest roads and established a $150-million fund to leverage investments for plant modernization.