Deal reached, but battle rages on over Ontario budget bill

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The Ontario minority government's budget bill is set to pass by the end of June, paving the way for a new surtax on the rich and a freeze on corporate tax rates effective July 1.

House leaders for all three parties reached an accord late Wednesday that allows for more time to debate the omnibus, 351-page bill.

However, the agreement will not end the bickering over a key provision that is not contained in the budget bill itself - wages for public sector workers who bargain collectively.

Finance Minister Dwight Duncan said on Thursday that he is prepared to impose a legislated wage freeze on doctors, teachers and other unionized public sector workers if they do not agree to "push the pause button." Before doing so, however, the government is trying to negotiate voluntary freezes at the bargaining table but talks have broken down with doctors and teachers.

Progressive Conservative Leader Tim Hudak is pushing for an immediate legislated wage freeze. Tory MPP Jeff Yurek's private member's bill proposing a freeze will be tabled on Thursday for second reading.

Much of the dispute between the Liberals and Tories revolves around different interpretations of a legislated wage freeze the British Columbia government imposed on public sector workers.

Mr. Duncan said on Thursday that contrary to Mr. Hudak's assertions, the freeze in British Columbia "failed miserably" and that is why no other jurisdiction, including the federal government, has attempted a similar move. The Supreme Court struck down the freeze, he said, because the government did not bargain in good faith.

"He is choosing sound bites over sound policy," Mr. Duncan told reporters.

Minutes later, Mr. Hudak held his own news conference, where he talked about the urgent need for the government to "rein in its ballooning public sector payroll" to tackle the province's $15-billion deficit. A freeze would save the province $2-billion a year, he said.

The Liberals have a choice, he said: "Support our legislation and take their first real step toward reducing the size and cost of their bloated government, or vote against it and prove to taxpayers they are not serious about tackling the mess they have made of Ontario's finances."

The sparring continued in Question Period, where Premier Dalton McGuinty made light about the challenges of leading a party in the political centre after New Democrat Leader Andrea Horwath asked if he was ready to "roll up his sleeves" and bargain with public sector workers.

"We find ourselves in the extreme centre, or what I would call the far middle," he joked.

Mr. McGuinty said the B.C. government "made a mistake" in directing its labour negotiators to reach two-year deals with no net increases in compensation costs.

"We're not going to do it because it's not going to work," he said in Question Period. "It's as simple as that."

However, Mr. Duncan signalled that the government is prepared to legislate a wage freeze. He initially floated the idea in his budget speech last March but omitted any mention of it in the budget bill in a bid to make it more palatable to the NDP.

Mr. Duncan said his officials have sought opinions from lawyers, who advise that the government runs the risk of overriding collective bargaining rights if it does not consult with workers before imposing a freeze.

"We have a strategy that's designed to sustain us through any court challenge," Mr. Duncan told reporters. "We have to achieve a real freeze."

Under the accord among the house leaders, the legislature will sit an extra week until June 14 before adjourning for the summer. Additional time will also be set aside for public hearings on the budget bill.

Both Ms. Horwath and Mr. Duncan told reporters after Question Period that they expect the budget bill to pass.

Mr. Duncan said the Liberals will "keep an open mind" on amendments the NDP plans to make but he stressed that any changes cannot after the government's fiscal plan.