Delayed by the snap election call, the provincial budget was finally presented by Finance Minister Peter Bethlenfalvy this week. Consistent with previous years, the emphasis of the Ford government is on spending growth instead of tax reductions and government efficiency improvements. Similar to other Canadian governments, the Ford government is using the Trump tariffs as the excuse for this latest big-spending budget. But in fact, this budget just follows the same path as previous big-spending budgets under the Progressive Conservatives when such tariffs were not on the table. If the Ford government had taken a more sensible balanced approach of limiting spending growth while reducing taxes on Ontarians in previous years, the province would be much more able to withstand Trump’s attacks today.
The biggest spending area in the budget continues to be infrastructure, including multi-billion dollar plans for highways, public transit, education and health infrastructure. Although some of this is defensible as some infrastructure has been neglected in Ontario for years, spending over $50 billion more for health infrastructure must be questioned as Ontario already spends much more per capita with much poorer health outcomes than comparable universal systems in other countries. What is needed is a complete restructuring of our health care system, incorporating more private sector clinics within a single payer universal system. There has been some minimal progress on this front in Ontario, but much more needs to be done as throwing more taxpayer dollars at a broken system, as has been tried for years in Ontario, clearly isn’t working.
It is also disappointing to see the deficit increased by about $10 billion from previous forecasts, again justified by the U.S. threats. This budget claims that balance will now be reached in 2027-28, but as this date keeps getting pushed forward in every budget there is little confidence this target will be met. A number of funds have been set aside for specific purposes, such as $5 billion for “protecting Ontario” in the face of Trump tariffs and $20 billion to help laid-off workers. There are few specifics about the plans for spending these funds, suggesting they could well become slush funds in future which further reduce budget transparency.
Despite all the talk about the importance of Ontario’s “Ring of Fire” critical mineral resources, half a billion dollars is devoted to this development, again with very few specifics. Considering the potential of this resource wealth, it would seem more appropriate to have a much more specific plan for development, ideally in co-operation with the federal government.
Manufacturers and other SMEs have been leaving Ontario in record numbers in recent years, primarily for the U.S., because business conditions in Ontario are not competitive. This was happening long before the Trump Presidency with its intentions to make U.S. businesses much more competitive. Although an expansion of the manufacturing tax credit is welcome, corporate tax rates in the province continue to be out of sync with OECD averages and US rates. Trump’s plans to further reduce U.S. corporate taxes will worsen this disparity and leave Ontario businesses worse off.
Personal income taxes also remain uncompetitively high in Ontario, discouraging entrepreneurs and professionals from locating or remaining in the province. When first elected in 2018, the Ford government committed to reducing personal income taxes, but that promise has never been fulfilled. The top two personal income tax brackets in Ontario remain unindexed to inflation, which is basically theft, as taxes increase only because inflation has increased, not because the individual is earning more in real terms. That the Ford government has not moved to index these brackets to inflation is an absolute disgrace. The punitive high rates of tax of over 50 per cent on higher income individuals such as doctors, engineers, entrepreneurs and other professionals are deterring the very people we want to come and stay in Ontario. A very different approach will be needed in future if Ontario is to reclaim its previous role as the economic engine of Canada.
Overall, this budget is a disappointment but a continuation of its predecessors. Recently, Ontario has been called the “sick man of North America” as its economic indicators decline and its GDP per capita – a measure of the standard of living – has fallen behind even the poorest US states. Unfortunately, there is nothing in this budget that will change that status.
She has published numerous articles in journals, magazines & other media on issues such as free trade, finance, entrepreneurship & women business owners. Ms. Swift is a past President of the Empire Club of Canada, a former Director of the CD Howe Institute, the Canadian Youth Business Foundation, SOS Children’s Villages, past President of the International Small Business Congress and current Director of the Fraser Institute. She was cited in 2003 & 2012 as one of the most powerful women in Canada by the Women’s Executive Network & is a recipient of the Queen’s Silver & Gold Jubilee medals.
