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Prime Minister Stephen Harper emerged from a day-long meeting with the first ministers and said Canadians can expect to see "very significant deficits in the short-term" in federal and provincial budgets.

Harper said there is a broad consensus from the provincial premiers in the need for an extensive economic stimulus package from the government in its Jan. 27 budget.

""I think all of the premiers understand that we are in a very dangerous time for the world economy -- one that requires unprecedented collaboration."," Harper said. "It is up to government to come forward and make significant investments and sustain economic confidence."

Harper did not announce any specific funding plans coming from the meeting. He said one premier in particular wants tax cuts but did not say if that was in the works for the federal budget.

Officials have hinted that the federal budget will run a $40 billion deficit, much of it in the form of economic stimulus measures.

It is expected a large deal of the stimulus package will be aimed at infrastructure.

B.C. Premier Gordon Campbell told Â鶹´«Ã½net's On the Hill the tone of the meeting was "very constructive."

But Harper wasn't being praised by all premiers.

Quebec Premier Jean Charest challenged Harper for changes to the equalization formula that will restrict increases for have-not provinces to the rate of inflation.

"I see this as Mr. Harper breaking a promise he had made on the fiscal imbalance," Charest said.

Earlier, Infrastructure Minister John Baird said the Tories are committed to boosting infrastructure spending and to cutting through red tape to ensure money flows quickly.

"Infrastructure is badly needed in Canada and we believe it can be an important shot-in-the-arm to the Canadian economy," Baird told Â鶹´«Ã½net Friday afternoon in Ottawa.

Baird said money will be allocated in the budget for such projects as public transit, water treatment, roads, bridges, highways, and a convention centre in Ottawa.

He said the building "won't just create jobs during its construction, but will be a real boost to tourism and economic development when it's completed."

'Shovel-ready' to go

The federal government has earmarked $33 billion over six years for infrastructure projects. But because some of these projects need approval from all three levels of government, it can take a long time for that money to actually be spent, reported CTV parliamentary correspondent Roger Smith in Ottawa.

"So one of the key things here is not just the commitment to spend money on infrastructure projects --from social housing to new roads and new sewers -- but how to get that money going quickly," Smith told Â鶹´«Ã½net.

"The clich� of this week is 'shovel-ready' projects. The premiers and the big-city mayors want the money quickly so they can get shovels in the ground this spring, and put people to work right away," added Smith.

Canadians are 'anxious': McGuinty

On Friday morning, Ontario Premier Dalton McGuinty called the all-day meeting "a real opportunity for us to lend shape to the upcoming federal budget."

"I think we're all here to represent some of the sentiment being felt in households across the country," McGuinty said.

"Canadians are anxious, they're concerned about job losses, they're concerned about floundering businesses, there's a lot of anxiety and there's a lot of uncertainty."

He pointed to infrastructure projects as the best means of creating jobs in the short term while enhancing productivity in the long term.

"One of the most important things you need to do in this time is come together through your government and kick-start your economy by creating jobs and the kinds of projects people can see that do actually get shovels in the ground," McGuinty told Canada AM.

"Those are the kind of things that have actually proven historically to be very, very helpful when it comes to kick-starting the economy at times of slow economic growth."

Harper has promised to double infrastructure spending from $3 to $6 billion in 2009.

Support for workers

McGuinty also said the federal and provincial governments need to look at ways of helping those who have already lost their jobs.

In Ontario alone, he said, 100,000 families have been affected by recent job loss.

"We want to see what we can do in terms of better support through training, and also to provide them with better employment insurance benefits."

Newfoundland Premier Danny Williams, who has often been at odds with the prime minister, said he expects partisanship to be set aside as all the leaders work together to save the economy.

"I think the prime minister and the finance minister are here to get our advice and hear what we have to say," he said, noting that Newfoundland's fishery, oil industry and forestry industry have all been hurt by the recession.

Deficit warning

Alberta Premier Ed Stelmach warned that taking on a large deficit could have long-term implications.

"We have to be careful these deficits are short-term because the fallout may be inflation and higher interest rates three or four years from now if all governments around the world go to huge deficits and stay in high deficit mode," Stelmach told Canada AM.

Even oil-rich Alberta isn't immune to the effects of the slowing economy, he said. Low oil prices have drastically reduced the province's revenue, as well as its contribution to federal coffers.

"Are we better prepared? Yes, we've set some money aside, a cash account we can dip into...but we do have to be prudent in our budgeting and make sure we do create the incentives for further infrastructure spending."