Ontario's 2026 budget sees deficit hit $13.8B amid looming global instability

watch over unrecorded | 2026 Ontario budget highlights

The spectre of world-wide unstableness 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.

"Ontario is navigating economic challenges with a pragmatic and prudent fiscal plan," Finance Minister Peter Bethlenfalvy said in a statement.

"To help the province navigate these times and come out stronger, we are investing in strategic priorities such as energy, critical minerals, key infrastructure and critical technologies that will make our economy stronger, while cutting red tape and creating the conditions for businesses to grow, supporting workers and strengthening Ontario's economy."  

Last year, the province projected a balanced budget in 2027-28. Officials now project a deficit of $13.8 billion this year and $6.1 billion the year after, pushing the possibility of running a small surplus to 2028-29.

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. The provincial government is defending its spending, saying it is financing tens of billions of dollars in infrastructure projects.

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."

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.  

Missing from this year's budget documents are price tags for many of Ford's most recent big-ticket promises, including expansion at Billy Bishop airport in downtown Toronto, public live-streaming for bail hearings and a tunnel underneath Highway 401 — though budget documents do say field work for the latter project will start this spring. 

Reporter

---

---