TORONTO - The Ontario government has fired a warning shot across the bow of the province's public-sector unions, warning it won't be picking up the tab for wage hikes when current collective agreements expire.

"Ontarians value and appreciate the contributions of those who deliver their public services, and they also expect those who are paid by tax dollars to do their part to help sustain public services," Finance Minister Dwight Duncan said Thursday in his budget speech.

The government won't propose mandatory days off and it will honour existing collective agreements, he said.

"However, the fiscal plan provides no funding for incremental compensation increases for any future collective agreements," Duncan said.

The government promises the following austerity measures:

  • a three-year salary freeze for MPPs
  • freeze the pay of non-bargained political and Legislative Assembly staff for two years
  • freeze compensation for non-bargained employees of Ontario government workers and the broader public service for two years, affecting about 350,000 people

The government pegs those savings at $750 million, but it is planning to spend $115.9 billion on programs in this budget year, with a forecast deficit of $19.7 billion.

Duncan said the government plans to cut the deficit in half within five years and to eliminate it in eight years. In last year's budget, the province said it would balance the books by 2015-16.

The goal for program expense growth after 2012-13 is 1.9 per cent per year.

He noted that rising health expenditures are a significant cost pressure. Within 12 years, it could account for 70 per cent of government costs, up from 46 per cent today. Health is budgeted to cost $45.4 billion.

The government said it plans the following:

  • reduce the cost of generic drugs
  • make health professionals and executives more accountable for improving patient care


The budget builds on the "Open Ontario" theme of the throne speech. The government plans to invest $310 million to add 20,000 spaces to colleges and universities this September.

The government had previously announced its intention to aggressively recruit international students for Ontario universities.

The province's full-day learning program begins in September. In the next two years, the government plans to spend $245 million on capital grants for implementation.

It also plans to backfill $63.5 million in federal funds to preserve about 8,500 childcare spaces.

Northern Ontario got special attention:

  • a three-year, $150-million program to help industrial firms reduce their electricity costs by 25 per cent
  • $45 million over three years for skills training
  • a Northern Ontario Energy Credit for low and middle-income northern residents
  • a Ring of Fire co-ordinator to help guide economic development around the Ring of Fire mineral deposits in far northern Ontario, which look to be a rich source of chromite -- essential in the making of stainless steel

In last year's budget, the government announced more $32 billion in infrastructure funding to be spread over two years. It claimed the spending to date has helped create or preserve 300,000 jobs and boosted the economy by almost a full percentage point in 2009, adding another 0.4 per cent in 2010.

Political reaction

Duncan told reporters that the government's plan would "create opportunities for jobs and economic growth."

He denied the government appeared to be picking a fight with its unions, saying most Ontarians would agree with the government's approach to restraint.

But Progressive Conservative Leader Tim Hudak said Premier Dalton McGuinty failed to show leadership with this budget.

"Record-breaking deficits and debt, punishing taxes and regulations, have reduced Ontario to have-not status," he said, noting it will receive almost a billion dollars in equalization payments.

He said the McGuinty government will be doubling the province's debt by 2012-13.

The net debt is projected to be $267.8 billion that year. Ontario's current net debt-to-GDP ratio is 28.2 per cent, compared to 22.2 per cent for Canada.

Hudak said the $25 million being paid in severance to Ontario tax collectors, who will simply shift to the federal payroll, is unacceptable to both Ontarians and himself. He said his first amendment to the budget will be a clawback of that payout.

The Tories have a 10-point plan for improving the province's economy, Hudak said, adding he would hold a meeting immediately with the public-sector union leadership to discuss how costs can be contained.

"Dalton McGuinty will never balance the books," Hudak said, although Duncan noted earlier that the Ontario government had three consecutive balanced budgets before the recession.

NDP Leader Andrea Horwath said when she travels the province, she finds Ontarians worried about the future.

But she said the budget does little to alleviate those worries. "This budget leaves people paying more and getting less," she said.

Horwath accused McGuinty of "finally finding northern Ontario on a map," saying the North has been suffering for six years. However, she said the energy tax credit won't even cover the cost of the looming HST that starts July 1.

The government isn't delivering a "responsible plan for health reform," she said, adding some communities are already seeing a reduction in frontline health staff and services.

The McGuinty plan for all-day learning could destabilize the province's child-care system, she said.

On the potential wage freeze, Horwath said the freeze won't have that much impact on the top wage earners.

As to the rank-and-file workers, she said, "They will have to understand that they have to do their part as well."