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Ontario Premier Dalton McGuinty speaks to the media at the Ontario Legisltaure in Toronto after announcing his resignation on Oct. 15, 2012.Chris Young/The Globe and Mail

Ontario Premier Dalton McGuinty is stepping down, just one year after his governing Liberals won a third mandate and at a particularly low point for the party.

The news, delivered to Liberal MPPs during a caucus meeting over the dinner hour, caught Queen's Park by surprise and came the same day that Mr. McGuinty announced he was proroguing the legislature, having all business grind to a halt just as the government faces a fresh round of contempt allegations over its failure to disclose documents relating to two cancelled power plants.

Mr. McGuinty, 57, is leaving the political stage after 16 years as Liberal Leader and nine years as Premier. His departure comes amid a standoff with teachers and doctors over the government's initiative to freeze compensation and erase the province's $14.4-billion deficit. Mr. McGuinty has staked his government's reputation on health care and education.

"It's time for renewal," Mr. McGuinty told his caucus. "It's time for the next Liberal premier, it's time for the next set of Liberal ideas to guide our province forward."

Mr. McGuinty announced on Monday evening that he will stay on as Premier until a successor as party leader is chosen.

He told reporters that two recent events helped crystallize that the time had come for him to step down. With his wife, Terri, at his side, he said the wedding of his daughter, Carleen, last month reinforced the importance of family and friends to him.

"I thought it wasn't going to be that big a deal," Mr. McGuinty said. "You know, they had been dating for 13 years. But I found it actually to be pretty emotional to be there with her and my family and my extended family."

The other event, he said, was the Liberal Party's annual general meeting in Ottawa two weeks ago. Delegates strongly endorsed his leadership, but he said his responsibility is to the future and renewing the party. "That told me it was time."

Mr. McGuinty's mother, Elizabeth, said she thinks her son is the best premier Ontario ever had.

"He is a big boy and he knows what he's doing," Mrs. McGuinty said Monday night from her home in Ottawa, the city where she raised nine children including the Ontario premier and David McGuinty, who is a federal Liberal MP.

"He keeps everybody involved and feels very strongly for his workers," she said.

Almost immediately, there was talk that Mr. McGuinty was planning a jump to federal politics by seeking the leadership of the federal Liberals. He did little to quash the speculation.

"I'm not making any plans whatsoever beyond my term of duty here at Queen's Park," he told reporters Monday night.

When pressed specifically if he was closing the door on running, Mr. McGuinty laughed and said, "All I said is I don't have any plans."

It was his decision to prorogue the legislature, also announced at the caucus meeting, that came close to overshadowing his resignation. Mr. McGuinty met with Lieutenant-Governor David Onley earlier Monday to ask him to prorogue. He said it was necessary to have all legislative business grind to a halt, including the daily Question Period, because his government has reached an impasse with labour leaders and the opposition over its plans to freeze wages.

The time away from the legislature, he said, will provide an opportunity for his government to negotiate directly with labour leaders and the opposition "free of the heightened rancour that has sadly too frequently characterized our legislature of late."

Mr. McGuinty called the caucus meeting after a series of dramatic developments throughout the day at the legislature. The opposition accused senior cabinet ministers of misleading the legislature by insisting that they had disclosed all documents relating to the two power plants that were cancelled when in fact they were aware that was not the case.

The Progressive Conservatives initiated a process that could ultimately lead to cabinet ministers being found in contempt of Parliament, when Tory MPP Todd Smith called on Speaker Dave Levac to rule there is evidence government members misled the legislature.

"I am of the belief that the government misled the House," Mr. Smith told the legislature.

Energy Minister Chris Bentley is already facing a rare censure over his refusal to release documents to a legislative committee last May. The Finance Committee was supposed to have determined by Nov. 19 whether he should be held in contempt. But with the legislature prorogued, the committee's work has also ground to a halt.

Progressive Conservative Leader Tim Hudak praised Mr. McGuinty's contribution to the province but criticized his decision to prorogue the legislature, saying it was not in the best interests of the public.

"Given the scope of the challenges that our province faces, now is not the time to close down the legislature and to walk away," Mr. Hudak told reporters.

New Democratic Party Leader Andrea Horwath urged Mr. McGuinty to reconsider the prorogation, which she said will do a "disservice to the people of this province."

The legislature will not resume until a successor to Mr. McGuinty is chosen.

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