Ontario’s Budget Aims for Stability in Choppy Waters
Ontario Finance Minister Peter Bethlenfalvy unveiled his sixth budget this afternoon. After years of budget rollouts that included weeks of pre-budget announcements that often negated the purpose of having confidential stakeholder lockups, this year’s budget was a much more subdued affair.
To be sure, the government made plenty of news in the weeks leading up to the budget that was reflected in today’s document. The OSAP changes and the HST holiday on new home sales are in there. But overall, this was the kind of budget you would expect to see from a government eight years into its term of office.
By the Numbers
Projected deficit $13.8 billion.
Government revenues are up $5.3 billion to $231.9 billion.
Government spending is up $5.8 billion to $244.2 billion.
Debt servicing, a favourite talking point of Minister Bethlenfalvy is $17.2 billion.
A Theme Looking Outward
The themes were consistent with where Bethlenfalvy has stood in many of his public speeches since Trump’s tariffs began. Focused on domestic productivity and growth. Deeply concerned about the uncertain state of global and continental economic affairs. That latter point will surely be compounded by the reaction of bond markets to uncertainty around the current conflict in the Persian Gulf, and the possibility that the inflation monster of 2022-23 is resurrected.
It’s important to remember that inflation is a policy boomerang for governments. In the short term, governments that collect significant revenue from value-added taxes and own-source revenue benefit from inflation’s impact on prices. They pay on the back end, when the time comes to renegotiate public sector collective bargaining agreements. This is your reminder, parents, that the next round of education labour negotiations kick off later this spring.
The Texture Take
Right now, the government is benefiting from some of the same environmental elements that Prime Minister Mark Carney’s government is benefiting from in Ottawa. The overall economic climate is perceived to be a product of the actions of American President Donald Trump. In that context, voters will prefer stability to experimentation and will be reassured by the appearance that the government is holding steady in an unstable global market.
Conservative governments like it when budgets aren’t news events with long tails. They generally signal economic conditions aren’t forcing drastic action, and that spending restrictions were modest or well-targeted. Instead of reacting to economic circumstances, service disruptions, and the dreaded ‘A’ word, austerity, the government aims to make news on proactive policy where it has better control of the overall narrative.
How long the stability-versus-experimentation perception will be to the government’s benefit will likely be determined by the effectiveness of its opposition over the coming months. Long-term instability in the Gulf, its potential impact on short-to-medium-term inflation; and the coming negotiations with the province’s major education unions will surely have an impact. This fall’s US midterm elections will also have an impact as a US news-obsessed Canadian public is forced to digest whether it has to deal with two more years of full-strength Trump, or an early serving of lame duck.
Peter Bethlenfalvy’s Fall 2026 economic statement might end up being a better talisman for the government’s political fortunes than today’s budget.
The Opposition Lines of Attack
Ontario’s Official Opposition, Marit Stiles’ NDP, has been working to narrow its attacks into a sharper, pointier stick — and at the business end of that stick is Doug Ford’s record on jobs and the cost of living.
In advance of Thursday’s budget, Stiles released a blank report card, and filled it in Thursday afternoon, giving the Ford/Bethlenfalvy budget an F budget on its five report-card items:
Lowering the cost of living
Fixing health care and education
Building affordable homes
Creating good jobs
Spending your money responsibly
While still covering a lot of the waterfront, it’s an effort to move the NDP away from calculating the depth of dozens of cuts that feel contextually meaningless to Ontarians and, instead, honing her team’s focus on the kitchen table issues.
On the cost of living and creating jobs, New Democrats will to Premier Wab Kinew’s fresh Manitoba budget — which removed the tax from everything at the grocery store — and contrast that with the lack of affordability items in the Ontario budget,
Ontario’s unemployment hit 7.6 per cent in February, a brutal number compared to Saskatchewan’s 5.6 per cent or Manitoba’s 5.7 per cent. Stiles has been calling Ford a “jobs disaster” — and we can expect that needling to continue.
Look for Stiles to also put some focus on a $150 million cut to education and a $70 million cut to post-secondary education (the fruits of previously-announced OSAP changes) and how that will impact the next generation of Ontarians.
Interim Liberal leader John Fraser shares Stiles’ criticisms, but expects him to have an even greater focus on the deeper deficit number.
Budgets are about choices, Stiles and Fraser will say, before questioning some of Ford’s choices. He could afford more jobs training, lower taxes, more homes, and more doctors and nurses if he wasn’t spending mountains of taxpayer money on a tunnel under the 401, longer runways at Billy Bishop, a private spa and megaparkade at Ontario Place, a new science centre when the old one was perfectly fine, and, now, possibly filling in a part of Lake Ontario to build Canada’s largest convention centre, alongside the new budget’s reference to a new “observation wheel” in Niagara (which already has a ferris wheel). Expect that to frame to drive question period, including the heckles, for the coming weeks.
