The spectre of worldwide instability looms large in Ontario’s 2026 budget, which includes a small business income tax cut alongside a temporary reprieve on HST for buyers of new homes — but also pushes back a balanced budget for yet another year with a higher-than projected deficit.
The $244-billion spending plan is replete with phrases like “uncertainty” and “heightened trade tensions,” and includes an increase in reserve spending from $1.5 billion in 2026-27 to $2.5 billion in 2028-29.
Doug Ford’s government is still spending, but also appears to be putting money aside in the event of more economic bad news for the province.
The last year has been marked by “significant change in the world around us,” Finance Minister Peter Bethlenfalvy said while unveiling the budget at Queen’s Park Thursday afternoon.
“Geopolitical forces that may have once felt distant have now reached our shores,” he said. “Global economic and trade tensions, supply chain disruptions, shifting markets — simply put, the world has changed, and we must change with it.”
Last year, the province projected a balanced budget in 2027-28. Officials now project a deficit of $13.8 billion next year and $6.1 billion the year after, pushing the possibility of running a small surplus to 2028-29.
That nearly $14-billion deficit is a significant jump from the $7.8-billion deficit the 2025 budget eyed for this upcoming year as Ontario bets big on infrastructure, research and innovation funds, high-growth industries and cutting costs for small business.
“I’d prefer to have a smaller deficit,” Bethlenfalvy said. “I’d prefer to balance sooner, but we have to live in the world we’re in, and we have now many challenges in front of us.”
Ontario’s debt levels are at $485 billion for 2026-2027, up from $337 billion when Ford was elected premier — though that also comes after years of global upheaval in part due to the COVID-19 pandemic.
Debt servicing costs for Ontario are now $17.2 billion, which is more than the province is spending this year on post-secondary education. Bethlenfalvy says Ontario is taking on debt in order to build infrastructure such as hospitals, schools and roads.
Opposition leaders slammed the budget while speaking with reporters at Queen’s Park Thursday. NDP Leader Marit Stiles said it should have been an opportunity for Ford to choose a “more affordable future” for the province.
“What we heard instead was stale announcements, more cuts and a missed opportunity to deliver better for the people of Ontario,” Stiles said. “It’s simple. Ontarians want to know that their government is going to lower their rent and their grocery costs, that they’re going to fix our health-care and education systems, build homes that they can afford, spend their money responsibly.
“None of that was in the 2026 budget.”
Liberal Parliamentary Leader John Fraser called it a budget from a government that’s out of ideas after eight years in power.
“There are no new measures in this budget that are going to help families with affordability and their daily costs,” Fraser said.
“Doug Ford and this government are tired and adrift.”
Green Party Leader Mike Schreiner said there is little in the budget for the average Ontarian, but lots of measures that will make well-connected insiders happy.
“You can see it by the priorities in this budget — an island airport, a ridiculous tunnel under [Highway] 401, Ontario Place, Highway 413,” Schreiner said.
“These projects are so irresponsible that the government talks about them in the budget and never assigns dollar figures to them because they’re too embarrassed by the high cost associated with them, when so many people are struggling to get by.”
Budget documents do say that field work for the 401 tunnel will start this spring.
The budget allocates billions for what it calls high-growth industries, boosting research and innovation funds alongside the implementation of a small business tax cut.
The province’s recently announced plan to temporarily remove HST for buyers of new homes remains a key pillar of the budget, with plans in place for the full 13 per cent tax to be removed for new homes valued up to $1 million from April 1, 2026 to March 31, 2027.
For homes valued up to $1.5 million, the temporary measure would see them qualify for the maximum $130,000, decreasing proportionally to homes valued at $1.85 million, which would qualify for a $24,000 rebate.
The province is also planning to cut the small business corporate income tax rate from 3.2 per cent to 2.2 per cent as of July 1, which government officials say will benefit 375,000 small businesses.
It remains to be seen if the province’s HST break will stimulate the housing market, but right now, projections are low.
The government expects 65,000 new homes to be built in 2026, with 76,000 expected to go up in 2028.
The Ford government once promised to build 1.5 million homes in a decade, but has been off-track for years now. These latest projections mark a further scale back of that goal.
The province is also using the remaining $4 billion from a $5-billion account meant to protect from tariff-related shocks to create an investment fund that the government says will diversify the economy and increase independence from U.S. trade relationships.
There are a few large investments on the services side, including $1.1 billion for home care over three years and $1.1 billion for the upcoming year for hospitals.
The hospital sector had said it is dealing with a $1-billion structural deficit, but that it would need about $2.7 billion to meet full operating needs.
Ontario’s budget for autism services is also rising to nearly $1 billion. An additional $186 million is earmarked in this budget for the coming year, putting the total at $965 million.
