TORONTO -- Ontario may be loosening the purse strings for the next round of public-sector bargaining as it has a balanced budget in its sights.

The Liberals have run deficits for about a decade, at one point going more than $20 billion into the red, and for the past several years have implemented wage restraint bargaining terms, including public-sector wage freezes. For the last round of contract talks, the government dictated that any wage increases negotiated in public-sector deals must be offset by savings elsewhere.

But now, as the Liberals say they are on track to reach balance with the 2017-18 budget, "net zero" has been dropped as a restriction of public bargaining.

Premier Kathleen Wynne released new mandate letters to ministers last week, with less than two years to the next election, and the letter to Treasury Board President Liz Sandals contained no mention of such terms.

"That was in a period in time and we've been through that period and it's been a challenging time in those conversations with public-sector employees," Wynne said Monday.

"We'll go into a new round of negotiations recognizing that we need to continue to find ways to make decisions on compensation, on service delivery, that recognize the needs of the system and the needs of the individuals who work in the system."

Sandals said a lack of "net zero" terms in her mandate letter doesn't necessarily mean massive raises for public employees.

"Oh, I didn't say we were going to make it rain," she quipped.

"When you're dealing with very large unions and very large contracts there's always some challenges, so I would never anticipate that life will magically become easy when we're talking about collective bargaining."

Since about 2012, when a public-sector wage freeze was implemented, Ontario's public collective agreements saw an average of 0.6 per cent increases, Sandals said, lower than the federal government and the private sector.

Progressive Conservative Leader Patrick Brown said the government never really abided by their own net zero terms anyway, so dropping it "seems pretty meaningless."

"It was a Wynne stretch goal in the first place," he said.

A strike by correctional workers was narrowly averted in January after the government reached a deal with them that included a 1.4-per-cent lump sum payment for 2016 and a raise of 1.4 per cent in 2017.

But an arbitrator then awarded additional "special wage adjustments," giving correctional officers 4.4-per-cent raises next year and 3.4 per cent for probation officers.

Teacher and education worker contracts came with a total $402 million in salary increases -- a one-per-cent lump sum payment earlier this year and a one-per-cent raise on Sept. 1 with a further 0.5 per cent around January. The government said the deal was net zero, but it also came with an extra $300 million in costs to set up new benefit trusts.

Sandals, who was then the education minister, said "net zero" applied to offsetting wage increases, and the $300-million cost was not compensation.