Hospital and university executives in Ontario are bracing for a pay freeze covering all aspects of their compensation.
Finance Minister Dwight Duncan said he is looking at extending a two-year freeze introduced in 2010 for all public sector workers in the province who do not bargain collectively. This time, however, the proposed freeze would be broader, covering not just salaries but also bonus pay and other incentives for CEOs and other executives.
"That's on the table," Mr. Duncan told reporters on Tuesday. He said Premier Dalton McGuinty has asked him to look at "all aspects" of compensation for non-unionized public sector workers.
Compensation in the broader public service sector consumes 55 cents of every dollar the government spends on programs. The province needs to rein in program spending to help erase its deficit, forecast to reach $16-billion this year.
"You can't have a scenario that gets us back to balance that doesn't deal in a meaningful way with compensation," Mr. Duncan said.
The hint at what might be in this year's budget came on the eve of the release of a report by economist Don Drummond, who was appointed last March to review program spending and recommend reforms to help the province erase the deficit by fiscal 2017-18.
Key recommendations in Mr. Drummond's 700-page report have been widely leaked in the lead-up to Wednesday's official unveiling, including a call for an overall increase of only 0.8 per cent a year on program spending – well below historic increases of 7 per cent – and revamping the Premier's flagship, all-day kindergarten program.
"It's very sweeping and it will be very controversial," Mr. Duncan said. "He brings an economist's point of view to this. I don't think he spent a whole lot of time figuring out who he's going to make mad and not mad."
One controversial topic the Drummond report addresses is user fees – having patients pay for services currently covered by the province's universal Ontario Hospital Insurance Plan, or OHIP.
Mr. Duncan declined to comment on whether he is considering user fees. "We believe in the principles of public health care," he said without elaborating.
New Democratic MPP Taras Natyshak told reporters that his party would have some "major concerns" if user fees were a primary focus within the health-care system.
The minority Liberal government will need the support of either the opposition NDP or the Progressive Conservatives to pass this year's budget and implement the legislation required for a compensation freeze.
Progressive Conservative Leader Tim Hudak has criticized the earlier freeze because it did not also apply to unionized staff, who account for three-quarters of the province's one million public sector workers. The government's flagship restraint measure in the 2010 budget consisted of a voluntary two-year wage freeze for public sector workers who bargain collectively.
The policy failed, with labour leaders and arbitrators all but ignoring it. A review by The Globe and Mail last year of 23 settlements with employees of universities, hospitals, long-term care homes and police services found wage increases averaged 1.6 per cent over the two years. These settlements have helped set a pattern for public-sector wages in Ontario.
NDP Leader Andrea Horwath campaigned for last fall's provincial election on imposing a hard cap of $450,000 a year on hospital CEOs' salaries.