May 8 (Bloomberg) -- Ontario Premier Dalton McGuinty said he will seek backing from the opposition Progressive Conservatives on public sector wage freezes needed to bring the budget of the country’s most-populous province back to balance.
McGuinty, speaking at the Bloomberg Canada Economic Summit in Toronto, said his government “will do everything within our power” to deliver on a fiscal plan that seeks to eliminate the province’s deficit by 2017.
“We’ve entered into a period of prolonged slow growth. We have a significant deficit,” McGuinty said. “We’re not going to get out of this by sitting on our hands.”
McGuinty’s Liberals lost their majority in the provincial legislature in last year’s elections, and now must rely on the help of opposition lawmakers to pass laws. Moody’s Investors Service downgraded the province’s rating to Aa2 from Aa1 on April 26, calling Ontario’s goal to achieve a balanced budget “ambitious.” Standard & Poor’s said the spending targets were “challenging” as it reduced its outlook to negative.
Moody’s downgrade reflected the agency’s concerns about the political uncertainty in Ontario, and wasn’t a negative assessment of his government’s budget plan, the Ontario premier said.
“They expressed some concerns about our ability to deliver on that plan and specifically in so far as our status as a minority government,” McGuinty said. “We cannot deliver on much of our plan without the support of one of the two other parties.”
Won’t Avoid Responsibility
“It’s important that our public sector partners know that we will not shrink from that responsibility,” McGuinty told reporters after speaking at the summit.
Ontario announced plans to freeze the fees that the province’s doctors charge for health care in a bid to save C$338.3 million ($339.4 million) in the 2012-2013 fiscal year, the government said today in a statement.
McGuinty’s finance minister, Dwight Duncan, released a fiscal plan in March that will seek to freeze public-sector wages and scrap corporate tax cuts to balance its budget by 2017-18 as it tries to close Canada’s biggest provincial shortfall.
To survive the vote on the 2012 budget, the Liberals last month agreed to introduce a 2 percent tax on people with incomes greater than C$500,000, meeting a demand from the New Democratic Party. The surtax would generate C$470 million next year, McGuinty said, all of which would go to reduce the province’s deficit, which is slated to drop to C$14.8 billion in the year that began April 1.
No ‘Big Fan’
McGuinty said that while he was not a “big fan” of the tax, he had no choice to work with the NDP because the Progressive Conservatives “didn’t show up” and the government wanted to avoid a new election.
Ontario may need to legislate the pay freeze if it can’t come to a negotiated agreement with public sector workers and may again need the support of the opposition to implement the fiscal plan, McGuinty said.
“Now the big challenge is to confront some of our compensation issues,” he said. “I’m hopeful that I’ll find some common ground with the party that sits to my right.”
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