Ontario Deficit Expands by 10 Billion in 232.5 Billion Budget

Summary

Ontario deficit is forecast to grow by $10 billion in 2025–26, reaching $14.6 billion, as the provincial government deploys a $232.5 billion budget to shield industries from U.S. tariffs and stimulate economic growth. Key measures include a $5 billion emergency fund for businesses, expanded skills training, and a decade-long $200 billion infrastructure plan. Critics argue the budget neglects urgent housing and healthcare needs while delaying deficit reduction targets.

Ontario Deficit Grows $10 Billion Amid Trade Uncertainty

Finance Minister Peter Bethlenfalvy unveiled Ontario’s 2025 budget on Thursday, framing it as a necessary response to escalating U.S. tariffs that threaten the province’s auto, manufacturing, and agricultural sectors.
“We’re facing unprecedented economic headwinds,” Bethlenfalvy said during his speech at Queen’s Park. “This budget ensures Ontario remains competitive and resilient.”

The Ontario deficit grows $10 billion compared to last year’s projections, largely due to new spending on business supports and infrastructure. While the government insists it will balance the books by 2027–28 with a slim $200 million surplus, opposition leaders and economists warn that prolonged deficits could strain public services and increase debt costs.

Key Drivers of the Deficit Surge

1. U.S. Tariff Pressures

The budget allocates $5 billion to the newly created Protecting Ontario Account, a fund designed to assist businesses facing “significant disruptions” from U.S. tariffs. Eligible sectors include automotive, steel, and agriculture—industries that contribute $60 billion annually to Ontario’s economy.

Bethlenfalvy called the tariffs a “wake-up call” for Canadian policymakers, noting that Ontario’s real GDP growth is projected to slow to 0.8% in 2025, down from 1.5% in 2024. Ministry officials cautioned that economic forecasts remain volatile, with forward-looking indicators nearing pandemic-era lows.

2. Delayed Deficit Reduction

Last year’s budget predicted a $4.6 billion deficit for 2025–26. However, the revised $14.6 billion shortfall—triple earlier estimates—reflects higher spending on tax deferrals, infrastructure, and skills development. Debt interest payments alone will cost $16.2 billion next year, exceeding the combined budgets of Ontario’s justice and municipal affairs ministries.

Budget Breakdown: Major Investments

1. $200 Billion Infrastructure Plan

The province will spend $200 billion over 10 years on highways, transit, schools, and hospitals, including:

$33 billion in 2025–26 for immediate projects.
$61 billion for public transit, including GO Transit expansions and subway extensions.
$30 billion for highway repairs and the removal of tolls on Hwy. 407 East between Clarington and Pickering.

2. Skills Development and Tax Relief

$1 billion expansion of the Skills Development Fund to train workers in tech and trades.
$1.3 billion manufacturing tax credit to incentivize local production.
$9 billion in tax deferrals for 80,000 small businesses.

3. Healthcare and Education

Healthcare spending rises marginally to $91.1 billion, though critics note the increase falls below inflation rates. Highlights include:

$235 million for 305 new primary care teams, aiming to connect 300,000 Ontarians with family doctors.
A fertility treatment tax credit covering 25% of costs up to $5,000 annually.

Education funding remains stagnant at $38.4 billion, despite a $12.7 billion backlog in school repairs.
“Students deserve better than crumbling classrooms,” said NDP Leader Marit Stiles.

Housing Shortfalls Draw Criticism

The Ontario deficit grows by $10 billion, but housing starts are projected to drop sharply. The province expects just 71,800 new homes in 2025, down from 92,300 forecasted last year.

Housing advocates called the revised targets “alarming,” noting Ontario must build over 100,000 homes annually to meet its 1.5 million target by 2031.
“This government has no credible plan for affordability,” said NDP MPP Jessica Bell. The budget offers no new funding for affordable housing, though it includes $75.5 million for homelessness prevention programs.

Smaller Measures: Cannabis, Alcohol, and Critical Minerals

Cannabis Regulation Changes: Stores may remove window coverings to improve safety, and a new “Ontario Grown” label will highlight locally sourced products.
LCBO Discounts: A 15% wholesale price cut for bars and restaurants, costing the province $56 million in lost revenue.
Critical Minerals Fund: $500 million to develop mining in the Ring of Fire region, a move the government claims will “unlock economic potential.”

Opposition Reacts: “A Budget of Missed Opportunities”

Opposition leaders lambasted the budget for prioritizing corporate supports over public services.
“This isn’t a plan—it’s a surrender,” said Liberal Leader Bonnie Crombie, criticizing the lack of healthcare and education investments.

Green Party Leader Mike Schreiner highlighted environmental gaps:
“Where’s the funding for renewable energy or climate adaptation? This government is stuck in the past.”

Fact Check & Verification

2025 Ontario Budget Document: Government of Ontario
U.S. Tariff Impact Report: C.D. Howe Institute
Housing Start Data: Canada Mortgage and Housing Corporation
Healthcare Funding Analysis: Ontario Health Coalition