Kathleen Wynne is moving fiscal matters to the top of her agenda with promises to create jobs and expand Ontario's economy – a marked change in tone for a Premier who came to power five months ago with a focus on social justice.

And Ms. Wynne, who so far has enjoyed a conciliatory relationship with organized labour, is putting public sector unions on notice that she will not allow their contracts to derail her plan to balance the budget in four years. If teachers and other public servants want pay hikes, the money will have to come from program spending.

Her focus on the economy is tacit acknowledgment that, while Ontario weathered the global recession better than most jurisdictions, unemployment remains slightly above the national average and such bread-and-butter issues will likely decide the next election.

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The tough talk on fiscal restraint is also the first indication Ms. Wynne is willing to play hardball with organized labour, putting her Liberal Party's complicated relationship with the unions on the line in the name of washing away red ink.

"We didn't put new money into the budget for new wage enhancements, so any collectively bargained agreements that … include increases are going to have to be found within," she told The Globe and Mail in an interview at her Queen's Park office. "Those discussions will be difficult because we have to find those internal constraints. That is how we are going to manage through these next few years as we stay on track to eliminate the deficit."

The Liberals' big-tent support base nearly eroded last year, when Ms. Wynne's predecessor imposed contracts on teachers, and she has spent much of her time mending fences. Just last month, the government reached a deal to give public school elementary teachers the same pay as their counterparts in other unions.

But concessions will only go so far. The budget holds program spending increases to an average of one per cent, and any raises or benefit increases have to be found within those parameters, Ms. Wynne said.

"We have to continue constraint," she said. "We have started, and we need to continue, and that is signalled in our budget."

Potential wage increases could be paid for in different ways, such as by putting off capital costs or overhauling programs. The government is making major changes in the health care system, for instance, by increasing home care to save money on costly hospital stays.

The Liberals are ruling out some money-saving measures such as increasing school class sizes or delaying the roll-out of full-day kindergarten. A government source also indicated Queen's Park wants to avoid significant public sector layoffs.

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But one union leader said that, after years of attrition, some job losses are likely. Warren (Smokey) Thomas, president of the Ontario Public Service Employees' Union, said making workers choose between wage freezes and cuts to spending or benefits adds a "guilt factor."

"I don't think it's okay at all," he said. "I think they should just come to the table, give us the research we ask for so we can see the fiscal situation and take it from there."

He suggested that if Queen's Park wants to save money, the government should lay managers off instead of making front-line workers bear the burden.

Ms. Wynne's focus on fiscal policy, however, will not be entirely controversial. The budget included several job-creation measures, including $295-million to put 30,000 young people to work, tax cuts for small businesses and help for manufacturers to buy new equipment.

The Premier contends that subsidizing the wages of young workers while they learn in-demand skills will lead to permanent employment, and a better-trained work force will allow businesses to expand. She also pitches her $50-billion transit-building scheme as a way to boost productivity.

Where once she framed these matters in social-justice terms, now she speaks of them in economic ones.

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Asked to name her priorities, she does not hesitate: "The top issue – and this just becomes clearer and clearer every day – is employment, jobs, and finding ways to really make an impact on the unemployment situation that we're facing."