GODERICH, Ont. - Ontario's doctors will get a 12.25 per cent wage increase under a new $8-billion, four-year contract that will cost the province's taxpayers $1 billion more than the last agreement.

The extra money "in a very fair agreement" is needed to help attract and retain doctors in the province, Premier Dalton McGuinty said Monday at a Liberal caucus retreat in southwestern Ontario.

"One of the things that we've got to do, of course, is ensure that we're competitive ... to attract and keep doctors here in Ontario," said McGuinty.

"One dimension of that, of course, is ensuring that our doctors are fairly paid, and I'm convinced that through this agreement we will continue to ensure that our doctors are fairly paid."

The tentative agreement with the province's 25,000 doctors also includes $240 million in new program funding and another $100 million in one-time "incentive" funds. It calls for wage hikes of three per cent, two per cent, three per cent and 4.25 per cent in the final year.

"This has been a difficult negotiation," OMA president Dr. Ken Arnold said in a statement announcing the deal to doctors.

"Government took a very tough stance on a number of our priority issues ... but recently we achieved movement at the table that resulted in the current proposal."

The OMA's governing body will vote on the new contract Oct. 18 after all the member physicians have their say in a referendum.

"I do hope they ratify it because it's a fair deal for Ontario's doctors, but importantly, it's a fair deal for Ontario taxpayers, and that was really important," said Health Minister David Caplan.

"This is the very first time where there has been an explicit agreement between the government and the Ontario Medical Association to do something about, and to work collaboratively on, unattached patients, people who do not have access to a family physician."

Few other details of the tentative OMA contract were available Monday, but the Opposition said the government needs to come up with a comprehensive, long-term plan to encourage older doctors to stay on the job.

"The Liberal government's track record is not good. They haven't made Ontario an attractive place for doctors to live and work," said Conservative health critic Elizabeth Witmer.

"There are about 2,000 doctors nearing retirement age, and I hope there's something in that agreement to encourage them to keep practising."

The government should have used the negotiations with the OMA to change the schedule of benefits in the agreement to encourage more preventative health practices by doctors, said NDP critic France Gelinas.

"If they left that schedule of benefits the same, then they shot themselves in the foot," Gelinas said in an interview.

"We need best practices. We do not need more of the status quo."

The government's last agreement with the doctors expired at the end of March, and the two sides have been negotiating the new four-year deal since February.