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* Liberal gov't freezes wages, cuts sick days
* Part of broader push to cut budget deficit
By Russ Blinch
TORONTO, Jan 3 (Reuters) - Ontario's government said on Thursday it will impose labor contracts on tens of thousands of teachers in Canada's most populous province as part of its controversial push to reduce a large budget deficit.
Education Minister Laurel Broten announced contract terms covering some 130,000 teachers that included a broad wage freeze, a reduction in the number of sick days and limits on the number of sick days teachers are allowed to cash out when they retire.
Ontario's Liberal government, which holds only a minority of seats in the provincial parliament, managed to reach tough new deals with other teacher groups and its doctors but failed to come to terms with the larger group of elementary and secondary school teachers.
The showdown led many teachers to drop extracurricular activities and take other job action such as one-day strikes.
The new deal will save the province C$250 million ($253.79 million) in 2012-13 and C$540 million in 2013-14, the government said in a statement. In addition, the government will realize one time savings of C$1.1 billion from changes to the sick day policy.
The new contracts will expire in August, 2014.
Ontario Premier Dalton McGuinty, who announced late last year that he would resign once the Liberals elect a new leader in January, pledged last March that the government would reduce its C$14 billion deficit by holding the line on public sector wages.
The government passed a law last fall covering its public sector workers that froze wages, cut sick days and limited their right to strike. The legislation, which sparked furious opposition from labor groups, set the bargaining deadline for last Dec. 31.
Ontario's teachers are among the highest paid in Canada, a country where educators rank as some of the best compensated in the world.
Credit rating agencies have repeatedly warned Ontario that tackling its deficit would require tough austerity measures.
Healthcare and education make up about 70 percent of Ontario's spending, with wages and fees accounting for more than half of the expenses.