The Top Line
Finance Minister Peter Bethlenfalvy today released the Ford government’s fiscal plan for 2025, titled “A Plan to Protect Ontario.” The budget was delayed approximately 2 months due to the provincial election held earlier this year. Once again, the Minister has held the line on tax increases while offering a budget to build Ontario.
In addressing the U.S. tariffs, Bethlenfalvy called them a wake-up call for Canadians.
Today’s budget follows on the footsteps of the Throne Speech last month where the Minister recognized the new mandate given to the government as an opportunity to address key economic challenges coupled with a strong directive given to the Premier to face the U.S. tariffs and the challenges of these uncertain times.
A recent report from Ontario’s Financial Accountability Office said American tariffs will reduce demand for Ontario’s exports, slowing real GDP growth from the projected 1.7% to 0.6%, which “implies that a modest recession would occur in 2025.”
The budget holds true to recent remarks by the Premier who signaled that his government’s budget would favour spending over balanced books, to keep the economy afloat considering U.S. President Donald Trump’s tariffs.
The Premier even apologized to the Finance Minister recently when he said: “The Minister really watches the dollars.” In fact, the Minister warned that the Premier’s plans will throw off the government’s path to balance. Premier Ford now suggests he still has a path to balance, but it might be a bit different. “We have two choices, right, either start cutting infrastructure and everything else, or you hang in there for a year or two, and we balance,” he said. “We’ll make up the difference in the next couple years, but it’s about today, right now, how are we going to support these families? So again, Peter (Finance Minister Peter Bethlanfalvy), thank you for being understanding and making sure the people of Ontario will always be taken care of.”
The budget focuses on strengthening the economy, including more money for housing, skilled workers, infrastructure development and attracting additional manufacturing opportunities to the province by providing the following:
- Providing Relief and Support for Workers and Businesses;
- Unleashing Ontario’s Economy;
- Supporting Families, Workers and Communities; and,
- Delivering Better Services.
The government also highlighted several ambitious projects including tunnelling under the 401 across the top of Toronto; building an all-season dependable road access to the Ring of Fire; a new deep seaport in James Bay to serve as a gateway to bring Canadian resources to new markets; and, continuing to build GO2.0 which is expanding GO train service in southern Ontario.
Specifically, the budget supports recent announcements made by the government, including:
- Increasing the Ontario Made Manufacturing Investment Tax Credit rate from 10% to 15% which was first announced in the 2023 budget.
- Deferring select provincial taxes for businesses, giving them relief amid U.S. tariffs.
- Introducing the Protect Ontario by Building Faster and Smarter Act, 2025 to spur new construction by working with municipalities on the cost of development fees.
- Permanently extending the 5.7 cents per litre cut to the gas tax and the dropping tolls on the government-owned eastern 20 km of the 407.
Budget Highlights
Economic Resilience and Immediate Support
- $11 billion in immediate support for individuals and businesses which includes
- $9 billion through deferred provincial taxes.
- $2 billion in Workplace Safety and Insurance Board rebates.
- $40 million for the new Trade-Impacted Communities Program.
- $20 million for new training and support centres for laid-off workers.
- A new Protecting Ontario Account that will be created with a $5 billion fund to provide liquidity and support for tariff-impacted businesses
Economic Diversification and Strategic Investments
- Ontario Made Manufacturing Investment Tax Credit that provides an additional $1.3 billion over three years to help lower costs for businesses that invest in buildings, machinery and equipment that are used here for manufacturing or processing.
- $500 million Critical Minerals Processing Fund to provide strategic financial support for projects that will accelerate the province’s critical minerals processing capacity.
- Major expansion of interprovincial trade by eliminating internal barriers alongside new legislation to remove Ontario-specific exceptions under the Canadian Free Trade Agreement (CFTA).
- $50 million Ontario Together Trade Fund to help businesses with their supply chain efforts.
Energy Infrastructure and Innovation
- Ontario is investing in new energy production, transmission and storage, leading the largest expansion of electricity generation in more than 30 years, including:
- Four new small modular nuclear reactors at Darlington.
- Refurbishment of Darlington, Bruce, and Pickering nuclear stations.
- $4.7 billion to refurbish hydroelectric stations.
- Expansion of pumped storage and hydrogen infrastructure.
- A $30 million Hydrogen Innovation Fund to unlock hydrogen’s potential to drive economic growth.
Infrastructure
Ontario’s infrastructure investment plan includes over $200 billion in funding over the next 10 years, with significant allocations across various sectors:
- Nearly $30 billion for highway projects. This includes Highway 413, Bradford Bypass, and the 401 tunnel and $61 billion for public transit including subway expansions, GO Transit, and LRT projects.
- $56 billion for health infrastructure. This includes over 50 hospital projects and 3,000 new hospital beds.
- $6.4 billion for long-term care. This includes 58,000 new and upgraded beds by 2028.
- $30 billion in school and childcare construction and $5 billion for postsecondary facility modernization
Cost-of-Living Support and Tax Relief
- Ontario Made Manufacturing Investment Tax Credit: Enhanced refundable credit rate of 15% for eligible manufacturing investments from May 15, 2025, to January 1, 2030.
- Permanent reduction of gasoline tax by 5.7 cents per litre and fuel tax by 5.3 cents per litre starting July 1, 2025.
- Alcohol tax and mark-up reductions for spirits, beer, cider, and ready-to-drink beverages starting August 1, 2025.
- Ontario Taxpayer Rebate: $200 for each eligible adult and child, totaling $3 billion in support.
- Highway 407 East toll removal effective June 1, 2025, saving drivers approximately $94 million annually.
- One Fare Program: Free transfers between transit systems, saving daily users an average of $1,600 annually.
Public Safety and Social Stability
- Launch of Operation Deterrence to enhance border and public safety.
- $75.5 million additional funding to tackle the rising issue of homelessness and recovery programs.
- $1 billion to expand the Ontario Police College and build a new OPP academy.
- Convert drug injection sites near schools into addiction recovery hubs.
Health and Education Investments
- $1.8 billion for Ontario’s Primary Care Action Plan, $56 billion over 10 years for hospital infrastructure, and $303 million over three years for community-based mental health services.
- Over $30 billion in the next 10 years for new schools and childcare spaces, $2 billion annually for school repairs, and $4.2 billion in 2025–26 for school infrastructure.
- $750 million over five years to publicly assisted colleges and universities to support 20,500 student seats in STEM programs annually, $75 million for construction-related programs, and $56.8 million for nursing education expansion.
Addressing Contraband Tobacco
- The presence of contraband tobacco undermines public health objectives, impacts public safety through links to organized crime, and negatively impacts Ontario’s revenue integrity.
- The government is committed to addressing contraband tobacco and ensuring that those who seek to benefit from this illicit trade face stronger consequences.
- Renewing and strengthening the Ministry of Finance’s partnership with the Ontario Provincial Police (OPP) for the Contraband Tobacco Enforcement Team (CTET).
- Ontario is calling on the Federal Government to work with provinces and territories to explore strategies to address the national problem of online sales of contraband tobacco.
Economic Overview
Ontario’s economy has demonstrated resilience despite global challenges like U.S. tariffs and trade uncertainty. The province is projecting a deficit of $6.0 billion for 2024–25, which marks an improvement from earlier forecasts. However, the deficit is expected to rise to $14.6 billion in 2025–26 due to increased investments and economic pressures, before declining to $7.8 billion in 2026–27 and achieving a modest surplus of $0.2 billion by 2027–28. Over the medium-term outlook, the net debt-to-GDP ratio is forecast to stay below the target of 40% at 38.6%, demonstrating that Ontario continues to make positive progress towards reducing the debt burden, while remaining committed to the target originally set in the 2023 Budget.
Economic growth is expected to slow in the near term, with real GDP growth moderating from 1.5% in 2024 to 0.8% in 2025 and 1.0% in 2026, before recovering to 1.9% annually in 2027 and 2028. Nominal GDP is projected to grow by 3.1% in 2025, 3.0% in 2026, and 4.0% annually in 2027 and 2028. Employment growth has been strong, with 140,000 jobs added in 2024 (+1.7%), but job creation is expected to slow to 73,000 (+0.9%) in 2025 and 33,000 (+0.4%) in 2026 due to economic uncertainty. Employment growth is projected to improve to 74,000 (+0.9%) annually in 2027 and 2028. The unemployment rate, which averaged 7.0% in 2024, is expected to rise to 7.6% in 2025 before gradually declining to 6.2% by 2028.
Ontario’s inflation rate is expected to moderate and align with the Bank of Canada’s target of 2.0% annually from 2026 onward, assuming easing supply chain pressures and stable energy prices. However, U.S. tariffs, persistent service sector inflation, and potential supply chain disruptions could create upward pressure on prices.
Ontario’s economic outlook, including U.S. tariffs and heightened trade policy uncertainty, faces significant risks. It threatens its deeply integrated trade relationship with the U.S., particularly in key automotive and consumer goods sectors.
Geopolitical tensions and disruptions to global supply chains exacerbate these risks, potentially leading to higher inflation, increased borrowing costs, and financial market volatility. Persistent inflation in certain service sectors and prolonged elevated interest rates could further strain household spending and business investment.
Ontario’s reliance on international markets makes it vulnerable to external shocks, such as geopolitical conflicts or supply chain disruptions. While the province’s fiscal plan includes contingencies to address these challenges, the unpredictable economic environment requires ongoing vigilance and adaptability.
Despite these challenges, Ontario remains committed to protecting its economy and workers while investing in critical public services. Risks such as U.S. tariffs and trade uncertainty threaten business confidence, investment, and consumer spending. However, the government’s fiscal plan incorporates flexibility in contingency funds and a reserve to ensure the necessary fiscal flexibility is available to respond to changing circumstances.
Opposition Reaction
Marit Stiles, Leader of the Ontario NDP (Official Opposition)
“This is a missed opportunity to strengthen Ontario. The Premier and his government had a choice — to build a tariff-proof future so Ontario can take on the economic uncertainties from Donald Trump’s reckless tariffs,” said Stiles.
Stiles added that this budget delivers little hope and no reassurance, for the over-worked education and health care workers, for the auto workers, and for the families already stretched thin.
Bonnie Crombie, Leader of the Ontario Liberal Party
“It’s infuriating to watch taxpayer money funneled to insider friends, lobbyists, and donors while Ontarians are told to settle for less.” “This isn’t fiscal responsibility. This is political favouritism, said Crombie.
“Time and time again, Doug Ford has failed Ontarians,” she said. “I’m frustrated watching yet again this Premier care more about alcohol, which is mentioned more than 100 times in the budget, than health care.”
What This Means for You
As he has done since becoming Finance Minister almost five years ago, Minister Bethlenfalvy has once again held off on any tax increases. However, as the Premier indicated in previous weeks, the budget spends in many areas, greatly increasing the deficit and lengthening the governments plan to eventually balance the budget.
The Minister has also attempted to deal with the added burden of announcing a budget that had to account for the unknown and changing ways of President Trump’s U.S.-imposed tariffs. The result is a budget focused on growing the economy to hold off a recession, while trying to anticipate future impediments imposed on Canada and Ontario by the U.S.
“Our province has been faced with challenges before, and we have always emerged stronger and more united as a result,” said Minister Bethlenfalvy. “Today, with the 2025 Budget: A Plan to Protect Ontario,we put forward a plan that reflects the government’s vision and the mandate we received from the people of this great province to do whatever is necessary to protect Ontario workers, businesses and communities.”
In short, the government believes it has put the framework in place to face the unique challenges of today by protecting Ontario workers, businesses and communities.
Tariffs are here to stay and the budget is designed to address their impact on Ontario.
While prices will rise certainly in the short term there will be benefits that arise too. Inter-provincial trade barriers are coming down and Ontario is leading the way. This alone will be a significant factor for Canadian businesses and workers who will now be able to transfer their skills across Canada. The budget addresses the current financial state without passing along any significant burdens and only extends the path to a balanced budget to 2027-2028.
