What Happened?
Finance Minister Peter Bethlenfalvy tabled the 2026 Ontario Budget: A Plan To Protect Ontario on Thursday amid a turbulent economic context. While American tariffs continue to rock Ontario’s industrial base, Minister Bethlenfalvy cautioned Ontarians that the province will be further affected by global trade disruptions. For this reason, Minister Bethlenfalvy portrayed this budget as preparation for “tougher times” ahead.
This was reflected in Premier Doug Ford’s comments, which insisted his government was focused on “protecting communities, protecting their jobs … making sure people can bring home a paycheque.” The government also reaffirmed its pledge not to raise taxes on Ontarians.
Budget 2026 revealed a $13.8 billion deficit this fiscal year, with the province returning to a surplus by 2028-29. As a share of GDP, this represents the third smallest deficit among the provinces and the federal government, with 6-7 percent of revenue servicing interest costs.
Increasingly, officials in both Ottawa and Queen’s Park have begun to accept that CUSMA renegotiations may not relax the US’s trade grievances. As such, Minister Bethlenfalvy has attempted to create some fiscal space should faltering negotiations produce an economic shock. Despite this, Minister Bethlenfalvy did still permit some headline-grabbing spending items:
- Waiving the HST on new homes under $1 million for a year;
- Providing teachers with $750 to purchase classroom supplies; and
- Expanding jail capacity by building new facilities and inmate housing.
Top Line Figures:
- Total Revenues (2026-2027): $231.9 billion, $6.7 billion higher than forecasted.
- Program Expenses (2026-2027): $244.2 billion, (2027-28): $247.5 billion.
- Fiscal Forecast: (2026-2027): Deficit of $13.8 billion, (2027-2028): Deficit of $6.1 billion, (2028-2029): Surplus of $0.6 billion.
Industry and Worker Supports:
- Reducing the small business corporate income tax (CIT) rate from 3.2 percent to 2.2 percent, effective July 1, 2026.
- Accelerating the income tax deduction for the cost of depreciable assets, in parallel with changes announced by the federal government. These changes would lower the cost for investment in a broad range of assets and would take effect following the passage of federal legislation.
- Establishing the Protect Ontario Account Investment Fund, which the province will invest up to $4 billion, with the intention of attracting investment from pension funds and other private capital.
Infrastructure Investments:
- Expanding Billy Bishop Airport, with the province intending to bring forward legislation that would see it assume the City of Toronto’s current role in the tripartite agreement governing the airport, as well as taking ownership of city-owned land at the airport to support its future growth and expansion.
- Providing an additional $300 million through the Community Sport and Recreation Infrastructure Fund, to help meet the needs of growing communities by supporting the repair, upgrade or construction of new sport and recreation facilities across the province.
- Investing in a ten-year capital plan, providing over $210 billion, including $37 billion, to build highways, transit and community infrastructure.
- Providing $107 million investment over three years for the renewed Critical Technology Initiatives (CTI) program, with an upcoming call for proposals to seek CTI delivery partners.
Housing:
- Removing the full 13 percent of the HST for all eligible buyers of new homes valued up to $1 million, in partnership with the federal government. This would provide up to $130,000 in relief to an eligible buyer.
Health and Education:
- Creating a province-wide primary care medical record system that will enable a patient’s family doctor to share their medical information with clinicians.
- Providing teachers with a classroom supply fund, providing $750 for teachers to purchase school supplies.
Miscellaneous Items:
- Expanding jail capacity by building new facilities and inmate housing to meet forecasted demands. The government will also hire 700 additional staff, including correctional officers and support staff.
Opposition Reaction:
Speaking to the media, NDP MPP Jessica Bell said the government had turned Ontario “into a have-not province.” Bell added that “the [government] love to pretend to us that they’re prudent fiscal managers, but this budget is telling us something else … They are on track to have a $500-billion deficit. That is very concerning.
Ontario Liberal MPP Stephanie Bowman said the budget was a “budget of broken promises.”
“In 2018, they promised a middle-income tax cut to families, to fix hallway health care, and create 300,00 manufacturing jobs. That tax cut isn’t in this budget, hallway health care is worse than ever, and there are 9,000 less manufacturing jobs in Ontario today. This is the eighth year in a row where the Conservatives have delivered a budget of broken promises,” she said.
What’s Next?
The budget will move quickly through the legislature, given the Ford government’s majority status.
Ontario’s Legislative Assembly is scheduled to sit until June 4 and then return from the summer recess on September 14.
If you’re looking to influence the implementation of initiatives announced in the Budget, contact us today at info@mcmillanvantage.com.
Team Vantage is here to help you navigate this fast-changing environment and position your company for success.
