Hundreds of thousands of teachers, nurses and all other public employees face higher pension contributions or reduced payouts to keep their plans sustainable, the Ontario government will announce Tuesday.

In his Feb. 15 report on revamping the scope of government, economist Don Drummond warned at the current rate of growth the government’s pension cost would grow 70 per cent by 2017-18, the year the Liberals hope to balance the budget.

The cash-strapped Liberal administration hopes any changes, which would not affect current pensioners, could save billions, insiders say.

Mindful that such measures will be politically explosive, specific proposals won’t be contained in Duncan’s budget bill, which has to pass the minority Legislature or trigger another election just months after the Oct. 6 vote.

Instead, pensions will be dealt with separately after a wide-ranging review.

“When faced with future shortfalls, pension plan sponsors should reduce prospective benefits to limit the need for future contribution rate increases,” Drummond noted in his two-volume, 668-page report that has served as the blueprint for Tuesday’s budget.

There are now deficits in three provincial pension plans — for the public service, members of the Ontario Public Service Employees Union and Ontario teachers, the economist said.

Duncan was tight-lipped on specifics.

“This budget is a uniquely Liberal budget. We are taking a balanced approach. We will be asking everyone to do their share,” Duncan told a large media throng in his office Monday.

But he is hoping his 350-page spending plan will garner enough support from either the Progressive Conservatives or the New Democrats for the minority Liberals to pass the budget.

“There will be some things in the budget that they like, yes, but there will be some things that they won’t like,” the treasurer said.

While taxes will not rise, some fees such as drivers’ licence registration and vehicle permits are going up for the first time in years.

“Some user fees haven’t been increased in 25 years,” he noted.

Duncan stressed there would be no privatization beyond the previously announced sale and leaseback of eight government buildings, the winding down of the Ontario Northland Transportation Commission railroad, and plans for further private-sector involvement in the Ontario Lottery and Gaming Corporation’s gambling operations.

He promised a “robust narrative on (public-service) executive compensation in the budget,” suggesting the hefty bonuses paid to high rollers at Crown agencies, boards and commissions will be curbed.

But he was coy about job cuts in the 1.06 million-strong broader public service, including 68,000 Ontario government bureaucrats.

“I expect to see a lot of people (protesting) on the front lawn here.”

On Sunday, Premier Dalton McGuinty revealed social assistance rates would be frozen and a planned increase in the Ontario Child Benefit slowed down by a year. It will rise $100 to $1,210 per child next year instead of by $200, with the rest of the hike kicking in July 2014.

Last month, Drummond predicted if the Liberals failed to act upon all of his recommendations, the government would confront a crippling $30.2 billion deficit by 2017-18.

He urged overall budget increases be capped at 0.8 per cent per year through 2017-18 with health spending growth, increasing an average of 6.3 per cent annually the past five years, restrained to 2.5 per cent.

Progressive Conservative Leader Tim Hudak said he’s “worried about the signals we’ve seen” on how much restraint there will be in the budget.

“All I’ve heard to date are one-offs, postponements and phasing-in. I’ve not actually heard about any actual spending reductions,” said Hudak, who spoke privately with McGuinty on Sunday.

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NDP Leader Andrea Horwath said her party is “taking a wait-and-see approach” about supporting the budget.

“I’m pretty concerned about the direction so far,” said Horwath.

With files from Rob Ferguson

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