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Ontario Premier Dalton McGuinty answers questions during a press conference on May 29, 2012.MICHELLE SIU/The Canadian Press

The McGuinty government is abandoning controversial plans in its budget bill to outsource major services to the private sector, a retreat that follows warnings from the opposition and labour leaders that the measure would have paved the way for the sale of Crown corporations without public scrutiny.

Under a proposed amendment to the government's omnibus budget bill, the only service that would be privatized is the one responsible for the delivery of birth certificates and driver's licences. Any additional efforts to have the private sector acquire major Crown assets or assume responsibility for government services would be part of a separate bill and put to a vote in the legislature.

Section 28 of the government's 351-page budget bill spells out its desire to shift additional services from bureaucrats to the private sector. Labour leaders and the Ontario Health Coalition called on the government to withdraw the section during committee hearings on the bill on Wednesday, saying it would move decision-making from the floor of the legislature to the back rooms.

"Some people have interpreted Section 28 as giving the government carte blanche," Finance Minister Dwight Duncan said in an interview Wednesday. "That's simply not the case. We are going to put forward amendments that I hope will put that concern at ease."

The New Democratic Party also raised red flags about Section 28, saying it would give members of Premier Dalton McGuinty's cabinet power to privatize government services without any checks and balances. Section 28 would transfer decision-making authority from the legislature to cabinet ministers.

"What we're looking for is something that requires the government to come back to the House before they privatize any service," NDP Leader Andrea Horwath said on Wednesday.

The minority Liberal government needs the support of the NDP to help pass the budget bill – the Progressive Conservatives have already said they plan to vote against it. Mr. Duncan said he does not agree with the objections that have been raised but is amending the bill as part of the "give and take" with the NDP.

"We need their votes," he stated bluntly.

However, the proposed amendments do not go far enough to satisfy others. Warren (Smokey) Thomas, president of the Ontario Public Service Employees Union, said the government has not thought through the implications of privatizing ServiceOntario, which he said would put the privacy of every Ontarian at risk.

"These guys are the masters of half-baked plans," Mr. Thomas said in an interview.

Mr. Duncan initially floated the idea of a public-private partnership model for ServiceOntario when he tabled the budget in March, saying it would lower the cost of delivering birth, marriage and death certificates as well as driver's licences. Some ServiceOntario kiosks are already owned and operated by the private sector.

Mr. Thomas said his main concern is that ServiceOntario would attract suitors from the United States because of the $2.7-billion in annual revenue it generates. The U.S.'s "intrusive" Patriot Act gives the government the power to order companies to disclose an individual's personal information, he said.

Labour groups plan to deliver a crate of oranges to Mr. Duncan's constituency office in Windsor on Thursday to protest against the budget bill, which they say opens the door to a repeat of the scandal swirling around the province's Ornge air ambulance service.

Fred Hahn, Ontario president of the Canadian Union of Public Employees, said Section 28 needs to be "completely removed" from the budget bill.