As promised, Ontario's finance minister delivered a budget Tuesday that was true to the spirit of austerity, with promises of pay freezes, a proposed overhaul of pension plans and a vow to reduce spending by $17.7 billion over the next three years.

But opposition parties say the budget falls short of helping Ontarians and they could be heading to the polls if the Liberal government doesn't make more concessions.

The 350-page document prepared by Minister Dwight Duncan outlines the Liberal government's plan to reduce its deficit to $15.3 billion. That's $1-billion less than what the government predicted it would be a year ago.

The estimated savings that will come from the budget is about $4.9-billion over the next three years.

The budget took into consideration some of the austerity measures proposed in the Drummond report, a document tabled in February that made hundreds of recommendations on how the province can effectively balance its books by 2017-18.

While the budget outright rejected nine of the report's recommendations, it contained measures that addressed about half of the ideas proposed.

Public sector employees will feel the brunt of the spending cuts but the cost-saving measures will also be felt by seniors, students and business owners.

Pensions and labour contracts

The government is tackling the amount of compensation they give to their employees and their institutions, saying that they currently give 50 cents out of every dollar they spend to compensating teachers, doctors, agency heads and executives.

Public service employees are being asked to do their part in balancing the budget by negotiating a new contract this year that bows to the government's austerity measures. Among the concessions the government is asking for are pay freezes and cuts to benefits in pension programs.

"Compensation is our greatest single cost," Duncan told reporters at a press conference Tuesday afternoon during the media lock-up. "We can't carry out our plan to strengthen our economy without addressing it. We need everyone to do their part to balance the budget."

The Liberals will consult with stakeholders to come up with a new way of managing pension plans -- a plan which will not affect current retirees.

The government wants to ask employees to contribute further to their own pensions, either by cutting back on their benefits or increasing their own contributions.

This measure will only affect those that are enrolled in a publicly-funded pension, which is only about one-third of Ontarians, according to the province.

In addition to the changes to pension plans, the government says it will be asking its employees to accept a two-year wage freeze. Teachers will also face changes to their sick days agreement.

The report clearly states that the government would be prepared to take legislative action if the unions refuse to accept the terms of the new contract.

"Where agreements cannot be negotiated that are consistent with the plan to balance the budget and protect priority services, the government is prepared to propose the necessary administrative and legislative measures," the report says.

Duncan reiterated the government's position during the news conference, calling their agenda a "fair approach."

"We'll have to take those steps eventually if we can't resolve problems at the bargaining table," he said.

Ontario NDP Leader Andrea Horwath, who was also at the media lock-up, told reporters she was "quite concerned" about what the government was suggesting.

"You don't have a respectful conversation with someone while holding a gun to their hand," she said.

Business woes

While Horwath said she was concerned about "language" in the budget report around collective bargaining, Progressive Conservative Leader and Opposition Leader Tim Hudak said he was more concerned about the lack of consideration for business owners.

The government reneged on its promise to cut the Corporate Income Tax rate to 11 per cent. Instead, the tax rate for businesses will remain at 11. 5 per cent.

Furthermore, businesses are also being hit with a cap on the benefits they receive from the Ontario Clean Energy discount plan. Currently everyone is eligible for a 10 per cent discount off their monthly bill.

The province has implemented a cap to the discount at 3,000 kWh per month – a rate that is only met by businesses, farms and other large properties. The average household uses about 1,000 kWh per month.

"This is a major failure," said Hudak during the lock-up. "This budget stifles job creation. They've put higher taxes on businesses and haven't addressed skyrocketing energy costs, which is a major component for businesses."

Education and health care

The Liberals are also targeting the way education is delivered in the province.

Although they are keeping true to their word by implementing full-day kindergarten starting Sept. 2014 and capping class sizes for the younger grades, the government is looking to reduce the amount of school boards and schools in the province.

For more on the impact to education, click here.

Students will also be pressured to move onto university faster. While many teens choose to stay in school for a fifth year in order to improve their grade-point average, the government is now capping the amount of credits a student can take to 34 – four credits more than what is required to graduate.

The government is also looking at new ways to manage Ontario's health care system.

They plan to recover some costs associated with the Ontario Drug Benefit program. Starting Aug. 2014, single seniors who make more than $100,000 a year will be expected to pay more for prescription drugs as will coupled seniors whose household income is more than $160,000. These seniors will now have to pay a $100 deductible plus three per cent of any income they make over that base income.

For more on the impact to health care, click here.

On average that means high-income seniors will have to pay about $665 more a year on prescription drugs.

The change will only affect about 5 per cent of seniors living in Ontario.

The Liberals have vowed to explore more patient-based funding in health care. They also promised to invest more in the health industry, committing to an increase in spending of 2.1 per cent each year for the next three years.

Other investments in health care include:

  • A plan to treat more seniors in their homes and not-for-profit clinics instead of hospitals
  • A home renovation tax credit to help seniors stay at home longer
  • Moving routine procedures to not-for-profit clinics

Inefficiencies and the private sector

The report says the government will look at inefficiencies with the way services are delivered and will look to eliminate any overlapping in bureaucracy.

As part of its mandate to shrink their costs, the government will look to reducing staffing and selling off their real estate.

The government announced it will be closing jails in Brantford and Chatham jails, moving inmates to some of the superjails being built. It will also continue with its plan to shut down the Toronto West Detention Centre.

The Liberals are also looking to expand public-private partnerships with ServiceOntario, the Ontario Northland Transportation Commission and the Ontario Lottery and Gaming Commission.

The government has also said it will have to scale back on infrastructure projects, delaying funding on key projects including the building of four hospitals and the creation of High-Occupancy-Vehicle lanes. Those HOV lanes that are already under construction will be completed.

Other cuts include funds to government building renewals, post-secondary school expansion and Ontario parks.

An election budget

The province says all these cost-cutting measures equals about $4 in savings for every dollar the government will spend. They are expecting to save about $6-billion by restraining the amount of funds spent on compensation and about $6.8-billion on containing costs in public sector.

Still, opposition parties say they're not happy with what has been proposed.

Hudak assured reporters that all his members would vote against the budget.

Whether the government will go to another election is "up to (Premier) Dalton McGuinty," Hudak said.

"We can't support this budget," he said. "We reject any approach that isn't going to help us create jobs in Ontario."

By vowing to vote against the budget, the future of the government now rests on the decision of Horwath and the NDP.

Horwath said she would need to discuss the issue with members of the party and Ontarians before making a decision on how to vote.

"It leaves us with a serious decision to make. For people who are worried about jobs, and getting the services they need, this budget has little to offer," she said.