STRATFORD, Ont. - EHealth Ontario's board of directors and the province's health minister won't be fired despite a public outcry over a spending scandal at the agency, Premier Dalton McGuinty said Tuesday.

The premier flatly rejected opposition calls for Health Minister David Caplan's head and said he still has confidence in his minister and the board, even though "clearly unacceptable" things have happened at eHealth.

"When you're in opposition, they're all hanging offences," McGuinty said.

"When you're in government, you actually have to exercise judgment and distinguish between different kinds of circumstances. And this one, to my way of thinking, doesn't call for the resignation of my minister."

Caplan took all the right steps -- including asking Auditor General Jim McCarter to speed up his probe of eHealth -- and shouldn't be blamed for the conduct of an agency which operates at arm's length from the Ministry of Health, he said.

McGuinty also launched into a passionate defence of Dr. Alan Hudson, who chairs the board that approved a $114,000 bonus for former CEO Sarah Kramer after only a few months on the job.

"I'm very proud of the work that Dr. Hudson has done and continues to do for us," he said of the neurosurgeon, who's in charge of reducing medical wait times in Ontario.

"He's acted in a volunteer capacity at eHealth, and you just couldn't get a better, more committed or more accomplished individual -- at any pay level -- to take on that responsibility."

EHealth, which is tasked with creating electronic health records in Ontario, has come under fire for questionable spending and awarding nearly $5 million in untendered contracts.

Opposition parties have accused both Kramer and Hudson of giving Liberal-friendly firms lucrative contracts without taking competitive bids and allowing some consultants to charge up to $3,000 a day.

Kramer's appointment as president and CEO was revoked Sunday amid the furor over eHealth, which allowed high-paid consultants to bill taxpayers for minor purchases like tea and snacks.

One consulting firm that received an untendered contract charged eHealth for such tasks as reading newspaper articles, reviewing voice-mail messages and talking shop during a subway ride.

Another consultant, Penny Ballem, was reportedly paid $30,000 for 78 hours work over the objections of an eHealth employee, who said no contract was signed for her work.

Ballem told the Globe and Mail she had no idea a staff member at eHealth had questioned her invoice.

Outrage grew after it was discovered that Kramer was paid the $114,000 bonus on top of her $380,000 salary, just a few months after she started the job last November.

Caplan at first defended the bonus, saying it's what Kramer would have received at her previous job at Cancer Care Ontario. But he quickly changed his tune late last week after the provincial agency said Kramer's bonus would have been about $40,000 had she stayed.

By Sunday, the government said Kramer and the eHealth board came to a "mutual agreement" that she needed to leave eHealth to help restore public confidence in the agency.

But she'll also receive nearly $317,000 in compensation -- a move that's outraged critics.

Both Caplan and McGuinty have insisted that no rules were broken in awarding the untendered contracts, which were allowed because of the "urgency" of eHealth's task -- even though the province's deadline for electronic health records is 2015.

Government officials point out that tougher contract procurement rules have been in place at eHealth since late March. Deputy health minister Ron Sapsford -- who helped draft those rules -- has been installed as temporary CEO of eHealth.

EHealth was established last fall after the first provincial agency tasked with creating electronic health records, Smart Systems for Health, spent about $650 million but failed to produce anything of value before it was quietly shut down.

Smart Systems spent 15 per cent of its $225-million annual budget on consultants, even though it employed 166 people with annual salaries exceeding $100,000.

Both McGuinty and Caplan have defended eHealth, saying it's tough to recruit top experts to build a provincewide electronic health records system when President Barack Obama is pushing a similar project in the U.S.

The U.S. is investing $50 billion over five years on e-health, while Ontario expects to spend another $2 billion on the project over the next three years.