Ontario Minister of Finance Peter Bethlenfalvy tabled the province’s 2025 budget on Thursday, May 15, 2025.
Summary/Political Context
This year’s $232.5-billion budget — titled A Plan to Protect Ontario — aims to protect workers, businesses, and communities from the economic uncertainty caused by United States (U.S.) tariffs. The budget is designed to help build a more resilient and self-reliant economy, while investing in health care, education and other critical services.
“Now is the time to spend on infrastructure and job creation in Ontario so the province can come out stronger on the other side,” Finance Minister Peter Bethlenfalvy said.
The 2025-26 budget delivers on a promise Premier Doug Ford made during his re-election campaign in February to spend big on tariff relief programs, including a $9-billion tax deferral and a $5-billion fund for businesses.
With the deficit projected to rise to $14.6 billion in 2025-26 from a previously estimated $4.6 billion, Ontario’s financial future is in stark contrast with the 2024 fall economic statement; it no longer includes a path to balance. The deficit will also come in steeper in 2026-27 at $7.8 billion, undercutting a previously expected surplus of $500 million. The budget also includes a $3 billion contingency fund and a $2 billion reserve fund.
Themes
Tariffs
The province was eyeing a balanced budget for 2026-27, but that came before the election of Trump and the implementation of tariffs. Now, Ontario is set to inch into the black in 2027-28 with a small surplus.
The new budget includes $30-billion to stimulate the economy in the face of tariffs as the real GDP is expected to slow to 0.8 per cent in 2025. Aside from the aforementioned $5 billion fund earmarked for relief for businesses, a new $40 million Trade-Impacted Communities Program (TICP) will help communities and local businesses disproportionately affected by the trade and tariff uncertainty. The government also set aside $5 billion for an infrastructure financing fund, as well as a new, $500-million Critical Minerals Processing Fund.
Health Care
The 2025 Budget includes $91.1 billion in health spending, an increase of $1.8 billion or 2% from 2024-25. Health care accounts for about 40% of government spending.
With the launch of a Primary Care Action Plan, the government is taking action to address the growing number of Ontarians without access to primary care. To support this work, $300 million over four years will go towards new primary care teaching clinics in partnership with Ontario’s medical schools to train the family doctors and primary care providers of the future—increasing total Primary Care Action Plan investments to $2.1 billion. The government will invest more than $235 million this year to establish and expand up to 80 more primary care teams, which it says will connect 300,000 more people to primary care.
The government is also focusing on building Ontario’s hospital infrastructure, with approximately $56 billion invested in more than 50 new and upgraded hospitals across Ontario.
Transportation and Infrastructure
The cornerstone of the budget is the plan to spend $200 billion over the next decade to build highways, public transit and hospitals, with the biggest share of the total intended for public transit (approximately $61 billion over a 10-year period).
Ontario plans to provide relief and support for businesses including spending $1.3 billion to lower the input costs for manufacturing over the next three years and defer some provincial taxes during the first six months of the fiscal year bolstering province-wide cash flows by approximately $9 billion a year.
Education
Education takes up the second-biggest chunk of the provincial budget after health care. Funding for the K-12 and post-secondary systems in 2024-25 totalled $51.5 billion, roughly one-quarter of Ontario’s total program spending.
The budget is promising close to $2 billion for the upcoming school year to repair and maintain schools. Last December, the province’s fiscal watchdog found that the province has a $12.7-billion school repair and construction backlog, and it would cost $31.4 billion over 10 years to clear it.
The budget is also pledging $10 million over three years to create new scholarship opportunities for First Nations post-secondary students interested in pursuing careers in resource development. It’s also earmarking an additional $207 million over three years in funding for research at Ontario universities.
Security and Public Safety
In the 2025 budget, $1 billion in funding is allocated to expanding and renovating the Ontario Police College in Aylmer, Ont., and developing a new Ontario Provincial Police academy in Orillia, Ont. It also proposes $8.8 million to support a one-time additional intake of up to 300 recruits in the basic constable training program.
The government included an additional $113 million over the next three years to combat illegal cross-border activity through measures such as air patrols and firearm seizures.
Fiscal Projections/Economic Outlook
The budget includes overall spending of $232.5 billion with the deficit projected to grow to $14.6 billion—but could come in anywhere between $12.3 billion and $17.6 billion— in 2025-2026, or 1.2% GDP.
Ontario’s net debt this year stands at more than $460 billion. Net debt-to-GDP and interest on debt-to-revenue ratios of less than 40 per cent and less than 7.5 per cent, respectively, are projected to increase but stay within the province’s self-imposed limits. However, net debt-to-revenue, will blow past the 200 per cent threshold to 211 per cent in 2025-2026.
Ontario is among the jurisdictions most exposed to U.S. trade policy, the government says in its budget. The U.S. is Ontario’s largest trading partner, with $194.9 billion in merchandise exports to that country in 2024. Investments in critical infrastructure and industries impacted by tariffs are an important first step in helping Ontario withstand its current economic challenges.
“The 2025 budget leans into the threat posed by U.S. tariffs, promising to protect the province by helping workers and businesses weather the storm,” a team of economists at National Bank of Canada said in a budget analysis.
The team at Diplomat Consulting looks forward to the opportunity to work with you and your business to assess opportunities for alignment with government objectives, as well as support you in understanding any political risk, please contact Diplomat Consulting at: hello@diplomatconsulting.com.
Naomi Mison
Public Relations Director
