06/15/2012 04:00 EDT | Updated 08/14/2012 05:12 EDT

Ontario Budget 2012: Dalton McGuinty Threatens Election, Says Opposition 'Gutting' Budget


TORONTO - A battle over the Ontario budget threatened to blow up into a summer election campaign Friday, with all three parties accusing each other of trying to trigger a vote they all agree no one wants.

"An election now, an election less than a year from the last one, would threaten our growing but fragile economic recovery," Premier Dalton McGuinty said as he threatened to call another election.

"Ontarians don’t want an election, but they do want the recovery and that’s what our budget is all about."

The problems began Thursday at committee, when the Conservatives voted with the New Democrats to scrap portions of the Liberal budget, including provisions to privatize government services.

McGuinty accused the opposition parties of "gutting" the budget, and said he'd rather call an election than have the legislature vote on a fiscal plan the Tories and NDP had dramatically altered.

"The NDP and the PCs are putting their own narrow, partisan interests ahead of the province. I cannot let this happen," McGuinty told reporters.

"If we cannot pass this budget we will take it to the people in a general election."

The Liberals made other concessions to NDP demands, such as amending their anti-bullying legislation to allow students to set up clubs called gay-straight alliances, which McGuinty said shows they want to make minority government work.

Playing politics with the budget and its schedule to eliminate the $15 billion deficit by 2017-18 is exactly what the credit agencies were worried about, warned the premier.

"You know if we receive a downgrade because we are plunged into an election less than a year from the last one, if our interest rates go up by one per cent, that costs us half a billion dollars," said McGuinty.

"I don’t think anybody wants an election, but I have a higher responsibility to protect the health and well being of this economy, and to continue to demonstrate ... to the world at large that we have a strong plan and that we will together deliver on that plan."

McGuinty accused NDP Leader Andrea Horwath of breaking an agreement to vote for the budget when the Liberals agreed to her demand for a tax on incomes over $500,00, but she said the premier new the New Democrats still wanted changes to the budget.

Horwath wasn't backing down from her position either, saying it was McGuinty who wants an election, not her.

"I made a commitment to ensure passage of the budget and I will do everything I can to keep my word and do exactly that," she said.

"I also made a commitment to ... improve the budget. I plan to keep my word to the premier and I expect, and I hope, that he will keep his."

The NDP oppose plans in the budget to update the labour arbitration system and to change environmental protections, and privately admit they were surprised when the Tories backed their amendment to block government privatization measures.

The Tories, who have vowed to vote against the budget since the day it was introduced, said they won't change their mind, and defended the move to block privatization, which they actually support.

"What we don’t like is having privatization where there is no oversight by the legislature," said Deputy PC Leader Christine Elliott.

"We agree with the principal of privatization, but the process put in place by this budget fails to be responsible."

Speaking in Hamilton, Opposition Leader Tim Hudak calls the budget battle between McGuinty and Horwath a "soap opera," and said he expects the NDP will support the government in the end.

"I think people in Ontario are tired of all this election talk from the premier," said Hudak.

"I guess at the end of the day the Liberals and the NDP, this so called happy marriage, will come together again."

The Liberals would need only one opposition party member to vote in favour of the budget for it to pass and avoid the automatic defeat of the minority government.

There will be two more days of clause-by-clause hearings on the budget bill Monday and Tuesday, with the final vote by the full legislature scheduled for Wednesday.

However, it's expected Liberal and NDP officials _ perhaps McGuinty and Horwath _ will meet this weekend to try and save their budget deal and avoid an election.

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Photo gallery What's In The Ontario Budget 2012 See Gallery