Ontario Finance Minister Peter Bethlenfalvy speaks during Question Period at Queen’s Park in Toronto, on Oct. 20.Laura Proctor/The Canadian Press
Ontario is projecting a slightly smaller deficit for this year, despite the economic drag of U.S. tariffs, while pledging more money to help businesses find new markets – and quietly scrapping its obligation to set climate-change targets.
Finance Minister Peter Bethlenfalvy released a fall economic statement on Thursday that said the province now expects a deficit in 2025-26 of $13.5-billion, down $1.1-billion from the $14.6-billion in red ink predicted in his May budget. The government does not plan to balance the books until 2027-28.
Opposition parties criticized the mini-budget, saying it contained no new help for Ontario’s growing number of unemployed, as the economy reels from the consequences of U.S. President Donald Trump’s tariffs on the province’s key auto and steel sectors.
They also criticized the government’s move, buried in the last few pages of the 199-page document, to scrap Ontario’s legal obligation to set climate-change targets, draft a plan and report on the province’s progress. Those provisions were passed by the Progressive Conservative government back in 2018, when they killed their predecessor Liberals’ cap-and-trade emissions-reduction system.
Noting the province’s low-emissions energy grid, Mr. Bethlenfalvy insisted that the province still intended to lead on greenhouse-gas reductions, a claim Green Leader Mike Schreiner dismissed as “B.S.” NDP MPP Jessica Bell told reporters that the decision made her wonder whether Ontario Premier Doug Ford was a “climate-change denier.”
Ontario Finance Minister criticizes lack of funding for 401 tunnel
While Mr. Bethlenfalvy has criticized the federal government for delivering a budget this week that consisted of “tinkering,” his fall economic statement also includes mostly small new initiatives, many of which have already been announced.
Among the new money to be allocated is a $100-million boost to a fund to help small and medium-sized businesses reduce their reliance on the U.S.
The government is also promising to develop a “multiyear tax action plan” and says more detail will be provided in next year’s budget. The plan will “help make Ontario the most competitive jurisdiction in Canada,” the economic statement says. The PCs promised a broad-based tax cut before they were elected in 2018, but never followed through, although they have since cut gas taxes and levies on businesses.
The fall economic statement includes a proposal to expand existing tax credits aimed at encouraging manufacturers to invest in new equipment.
It also includes a previously announced measure to completely exempt first-time buyers of newly built or substantially renovated properties under $1-million from the provincial portion of the Harmonized Sales Tax (HST), in conjunction with a federal government pledge to do the same for the federal share. Ontario expects the measure to cost it $245-million per year by 2027-28.
Carney earmarks $89.7-billion in new spending to counter U.S. protectionism
But the document also forecasts an even steeper drop in housing construction starts than the government had expected in May. Ontario now predicts just 64,300 housing starts in 2025-26, down from its earlier projection of 71,800. However, it also says it expects the market to rebound in the next three years.
The government has been silent in recent months about its pledge to build 1.5 million homes over 10 years, which would require an average of 150,000 starts a year – a goal that has faded far from reach in the current slump.
Speaking to reporters, Mr. Bethlenfalvy said Housing Minister Rob Flack now calls the pledge “no longer a hard target.” But Mr. Bethlenfalvy said the government still hoped to build more homes.
Ontario NDP Leader Marit Stiles accused the government of giving up: “This Premier is promising young Ontarians homes that just simply do not exist.”
Ontario Finance Minister Peter Bethlenfalvy looks on as Ontario Premier Doug Ford speaks at a press conference in Toronto, in July, 2024.Cole Burston/The Canadian Press
In his speech to the legislature, Mr. Bethlenfalvy said his plan is to cut red tape and invest in infrastructure to make the province more attractive to international investors, despite the trade barriers erected by Washington.
“As a province and as a country, we find ourselves in the midst of trade uncertainty that we did not ask to be part of, causing anxiety for workers and businesses alike,” he said.
The statement outlines a previously announced additional $1.1-billion over three years to offer thousands more people homecare medical services.
And it includes the government’s previously announced pledge to get rid of fixed election dates in the province, as well as raise the limit for political donations to $5,000 and make the per-vote public subsidy for political parties permanent.
Earlier this week, Mr. Bethlenfalvy said Tuesday’s federal budget should have included support for some of the province’s key priorities, including developing the Ring of Fire in Northern Ontario for mining critical minerals and Mr. Ford’s vision to build an up-to-60-kilometre tunnel under Highway 401 through Toronto.
Doug Ford says he expects Carney to back his Highway 401 tunnel proposal
Ontario’s fall update doesn’t explicitly commit money to the tunnel project, which has no design or official cost estimates. Experts have said the project could cost $60-billion to $100-billion or more, take decades to build and do little to alleviate traffic congestion.
The statement notes the government has launched a feasibility study to look at “tunnelling options” to increase capacity and reduce congestion, and said an unnamed Canadian company would be carrying it out.
Dakota Brasier, a spokesperson for Transportation Minister Prabmeet Sarkaria, said in an e-mail later Thursday that the $9.1-million contract has gone to WSP Canada, the domestic arm of the Montreal-headquartered global engineering advisory firm.
The government expects its net debt to hit $458.62-billion in the current fiscal year – up from $427-billion last year. That’s more than $100-billion in excess of the $323-billion in 2017-18, before the PC government was elected.
But Mr. Bethlenfalvy points to the ratio of the province’s net debt to its gross domestic product, which is down from projection in May’s budget and is now pegged at 37.2 per cent. That’s below Ontario’s target of 40 per cent and the lowest ratio since 2012. However, the ratio is expected to rise over the next three years.