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Ontario Health Minister Deb Matthews, left, listens as Ontario Finance Minister Charles Sousa delivers the 2014 budget next to Premier Kathleen Wynne at Queen’s Park in Toronto on Thursday, May 1, 2014.

Nathan Denette/The Canadian Press

Ontario nurses will be getting a raise of nearly 3 per cent over the next two years thanks to an arbitration award handed down on the eve of a provincial budget that froze hospital spending for the third straight year.

An arbitrator awarded the province's nearly 60,000 front-line nurses pay increases of 1.4 per cent in each of the next two years – less than the 2 per cent a year the union was after, but more than the association representing the province's hospitals had hoped to pay when talks between the two sides broke down in March.

The arbitration decision came down on Wednesday. The minority Liberal government, which is trying to fend off an election, released its budget on Thursday.

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Anthony Dale, the president of the Ontario Hospital Association (OHA) called the award "extremely disappointing," warning the new contract would add approximately $60-million in inflationary increases to the budgets of hospitals across the province. He would not speculate on where hospitals would find the money. "They're going to have to become even more efficient," he said.

Although generally pleased with the pay increase, the president of the Ontario Nurses' Association (ONA) said she and her members intend to keep pressing Premier Kathleen Wynne's Liberals – who could face a snap election if their budget fails – to ensure that cash-strapped hospitals do not cut nursing positions to make up the difference.

"Certainly if Minister [Deb] Matthews and the Liberals are still in place, we will be putting pressure on them, absolutely, in our discussions to assure that the appropriate funding is there for our patients and our nurses," ONA president Linda Haslam-Stroud said.

The ONA's last collective agreement expired on March 31. Under the previous contract, members of the ONA, which represents registered nurses, nurse practitioners and registered practical nurses, took a pay freeze in the first two years and a 2.75-per-cent increase in the third.

Talks between the OHA and nurses fell apart in March, leading the parties to call in an arbitrator who issued a short ruling that dealt only with pay increases.

Mr. Dale said the award was out of step with the voluntary agreements the OHA secured recently with other health-care workers' unions. In those cases, the parties settled on four-year deals that included inflationary pay increases of 0.7 per cent, plus lump-sum payments of 0.7 per cent.

Ms. Matthews' office was not available to comment.

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