Ontario's cash-strapped government will review a system that awarded bonuses to almost all eligible senior public servants as it tries to eliminate a $15-billion deficit, Premier Dalton McGuinty said Wednesday.

He made the comments after The Canadian Press reported that nearly 98 per cent of eligible managers in the Ontario Public Service got bonuses in 2011.

McGuinty said he's concerned that "a lot of people" are getting bonuses.

"If everybody gets pay for performance, it's not pay for performance, it's pay," he said Wednesday after touring a Toronto school.

"I think we need to revisit the whole concept of pay for performance, given our fiscal reality."

Earlier this week, the head of eHealth Ontario returned a hefty bonus after The Canadian Press reported it. Greg Reed, CEO of the provincial agency, received the $81,250 bonus on top of his $329,000 salary in June.

McGuinty said he has asked all public sector workers to "hit the pause button" on their compensation to help the government eliminate the deficit in 2017-18, including teachers and doctors.

Even members of provincial parliament have accepted a pay freeze for the last few years, he said.

The governing Liberals have clashed with both groups in their battle to freeze wages, with McGuinty warning that if they don't accept it, his government will impose it through legislation.

He said he doesn't think performance pay should be eliminated, but he's asked Finance Minister Dwight Duncan to take a look at the practice and provide advice on how it "fits" as the province tries to tighten its belt.

Province paid $35.6M in bonuses in 2011

According to documents obtained under freedom of information laws, about 8,700 of 8,900 eligible managers received performance pay in 2011, costing the provincial treasury $35.6 million.

The bonuses ranged from 0.46 per cent of pay to 12 per cent. The average was 3.6 per cent.

The government has said bonuses are part of the pay package for managers, and are only awarded to those who meet their performance commitments.

Those who received a bonus had their salaries frozen, which has saved the province $34 million since 2009, the government said. The total cost of performance pay has also dropped 30 per cent — or $16 million — since 2009.

But the opposition parties say it's unacceptable that so many OPS managers were given bonuses in tough economic times.

The Conservatives slammed the bonuses as "outrageous," claiming it's further evidence that the Liberals can't manage the province's finances.

NDP Leader Andrea Horwath said the Liberals are pitting one group against another by demanding a wage freeze from teachers while handing out bonuses to senior civil servants.

McGuinty said the rhetoric is "a little bit overblown," given that the practice was established under former Conservative premier Mike Harris and the New Democrats effectively supported performance pay by abstaining from crucial votes on the budget.

"Some of the thinking that guided Mike Harris in introducing it in the first place is pretty sound," he said. "There is a model that works well in the private sector."