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The austerity push currently the focus of Ontario Premier Dalton McGuinty and his Liberals has forced many in the party to set aside their own beliefs and go to war with their erstwhile allies.Dave Chidley/The Canadian Press

The Ontario government wants a permanent cap of $418,000 on the annual pay of future top executives at hospitals, universities and other public-sector entities to set an example for rank-and-file employees.

Proposed legislation announced on Thursday would set the pay of chief executive officers at two times the salary of Premier Dalton McGuinty, which is currently $209,000. The legislation would not apply to current executives, many of whom make more than $1-million a year. In all, 150 employees in the broader public sector are above the $418,000 threshold.

Finance Minister Dwight Duncan said he cannot ask front-line workers in the public sector to take a wage freeze without asking senior executives to share the pain.

"It's all about being fair and reasonable," Mr. Duncan said at a news conference. "Everybody needs to be seen to be doing their share."

New Democratic Party Leader Andrea Horwath has been calling on the government to cap executive pay at twice what the Premier makes – an idea the governing Liberals rejected until now. But Ms. Horwath said the cap should be not only for new contracts but for ones that are renewed as well.

"If the government's going to steal our ideas, at least they should get them right," Ms. Horwath told reporters.

However, government officials counter that the NDP proposal also excluded contract renewals.

The proposed legislation is part of a plan to rein in compensation and reduce the province's deficit of $14.8-billion.

Premier Dalton McGuinty said last week that his government will call on all public-sector workers to be "part of the solution" by voluntarily agreeing to a wage freeze for two years. If they don't co-operate, he warned, the government will use legislation to impose contracts. He made the comments a day after his government's new law freezing wages and banning strikes for the province's elementary and secondary teachers came into force.

If the proposed legislation for executives was designed to win over the rest of the public sector, it does not appear to be working.

"This is all political doublespeak," Fred Hahn, Ontario president of the Canadian Union of Public Employees, told reporters. "This is all a setup so they can freeze low-paid workers."

The Ontario Hospital Association said only 77 hospital employees earned more than $418,000 in 2010. It said capping their salaries would produce annual savings of just $4.7-million.

"This is another example of the government of Ontario and legislators devaluing the work and skills of hospital leaders, and those who lead Ontario's vital [broader public service] organizations," OHA president Pat Campbell said in a statement.

Warren (Smokey) Thomas, president of the Ontario Public Service Employees Union, called the announcement "window dressing."

OPSEU members earn an average wage of $45,000 a year. "If you give me $415,000, I'll go run a hospital until the day I die," he said.

In addition to the hard cap, 8,800 public sector managers who have not yet received performance pay for fiscal 2011-12 will have their compensation frozen for two years. This measure, which does not require legislation, will save the province $12-million a year. Virtually every employee in this group received a bonus in 2010-11.

Mr. Duncan could not put a figure on how much the salary cap could save the government, but said the measure is more symbolic.

Progressive Conservative finance critic Peter Shurman said Mr. Duncan missed the mark.

"We don't need symbolism," he said. "We need bold action."