Ontario’s economy fared better than the government had expected – even with the added uncertainty brought on by U.S. tariffs.Cole Burston/The Globe and Mail
Ontario says its deficit for the fiscal year that ended in March was just $1.1-billion, much lower than the $6-billion it had projected earlier this year. At the same time, the provincial government announced what it calls a “hiring freeze” for a list of agencies that includes Metrolinx, the body in charge of the province’s large public-transit expansion.
The numbers released Friday are backward looking. The province continues to face a much-larger $14.6-billion deficit for the current year, 2025-26. And its last budget, released in May, doesn’t predict balanced books until 2027-2028, as uncertainty hangs over an economy rattled by U.S. President Donald Trump’s tariffs.
And despite the “hiring freeze” label, hiring at all provincial agencies, boards and commissions will still be allowed for “business critical” posts, Treasury Board President Caroline Mulroney told reporters.
However, agencies will have to provide their ministries with human-resources plans justifying any requested increases in headcount. She said the government had implemented a similar freeze for the Ontario Public Service since 2018.
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According to documents provided by the government, staffing across provincial agencies had risen by 4.7 per cent since 2023, compared with 0.87 per cent for the core of the Ontario Public Service.
“It’s a cap on independent hiring, and that doesn’t affect business critical decisions, but we want to make sure that we’re delivering the services to Ontarians that they expect in a cost-efficient way,” she told reporters at Queen’s Park.
Beyond Metrolinx, the 143 affected institutions range from tiny bodies and advisory councils to Infrastructure Ontario, the Liquor Control Board of Ontario, the Ontario Clean Water Agency, the Royal Ontario Museum and Ontario Health, which co-ordinates the health-care system.
Dave Bulmer, president of Ontario’s professional employees union AMAPCEO – which has 17,000 members – said the decision to freeze hiring is misguided.
“Staffing in the province’s agencies, boards and commissions must be driven by need, not political posturing. Ontario is growing, and this decision will affect the quality of the public services that the people of our province rely on,” he said in a statement.
The smaller, $1.1-billion deficit figure for 2024-25 released on Friday was partly due to the fact that the province’s economy fared better than the government had predicted in last year’s budget – even with the added uncertainty brought on by U.S. tariffs.
The numbers, known as the public accounts, show that the province’s revenue from taxes and other sources came in much higher than Ontario had projected in its March, 2024, budget, up by 8.6 per cent.
But a big chunk of that revenue boost includes billions from a massive one-time settlement between provincial governments and tobacco companies in a legal battle over the harms of smoking.
Finance officials said Ontario counted $3.4-billion in tobacco money as revenue in 2024-25, reflecting what accountants call the “net present value” of the entire $7.1-billion the province is set to receive from the deal over the next two decades. The province’s Auditor-General signed off on this move.
However, the province had previously said, in its 2025-26 budget released in May, that it had booked an undisclosed amount of the settlement money in that fiscal year, including it in a larger envelope labelled non-tax revenue.
The court settlement was finalized in early March, 2025, just before the end of the past fiscal year, and as budget preparations for the current year were getting under way. Generally, accounting standards require the booking of revenue when it is earned, even if it is not expected to actually arrive right away.
In B.C., the way tobacco money has been accounted for has been controversial. The provincial NDP government of David Eby has faced flak from opposition Conservatives and the province’s Auditor-General for booking its $2.7-billion share of the settlement in the current fiscal year, instead of last year, helping to shrink a ballooning deficit projected to hit $11.6-billion.
Speaking to reporters, Ontario Finance Minister Peter Bethlenfalvy said the department heeded Auditor-General Shelley Spence’s advice on the smoking settlement.
“She’s very much focused on accounting rules,” Mr. Bethlenfalvy said. “The thing about it is these payments are over 25 years. What if the payments don’t show up? So that’s the downside of booking it all up front.”
While total tax and other revenues came in much higher than planned, Ontario’s spending in 2024-25 was also up by 5.8 per cent, or $11.5-billion more than planned, with increases in health, education – largely to the new lower-cost Canada-wide daycare system – and infrastructure.
The lower $1.1-billion deficit and the increased spending were made possible by better economic growth than Ontario had predicted: Instead of clocking a 0.3-per-cent increase in real gross domestic product, as projected in the 2024-25 budget last March, Ontario says it saw a 1.4-per-cent increase last year.
The numbers released Friday also show a restatement of the province’s 2023-34 deficit, which is now pegged at $700-million, up from $600-million.
With reports from Laura Stone