A lot has happened since the last Ontario budget. U.S. President Donald Trump launched a trade war against Canada and the rest of the world. Doug Ford’s Progressive Conservatives won a third majority government. Canadians elected a new Prime Minister, Liberal Mark Carney.
On the ground, growing uncertainty intensified the negative effects of inflation and higher interest rates: low-income levels and food insecurity rose among families with children; low housing starts shredded jobs in residential construction; tariffs cost the province 33,000 manufacturing jobs in April alone. The Financial Accountability Office estimates that tariffs may reduce the province’s economic growth by more than half in 2025, from 1.7 per cent to 0.6 per cent.
Against this backdrop, we analyzed the 2025 Ontario budget, assessing whether the province is bracing for impact.
Setting expectations
This is not the first crisis the PC government has faced. The CCPA closely monitored the Ontario government’s performance during and in the aftermath of the COVID-19 pandemic—it fell dramatically short.
Our analysis showed that the federal government covered 87 per cent of the cost for pandemic relief measures, creating fiscal room for the province to focus on its core areas of responsibility, which didn’t happen. Social assistance recipients received very little additional support during the pandemic. The province weakened rent controls. Education funding declined on a real-dollar basis. Per-capita spending on hospitals remained the lowest in the country. And nearly nothing has been done about the chronic underfunding of post-secondary education.
Despite the serious challenges of the past years, Ontario remains the province that spends the least on its people, on a per-capita basis.
On the revenue front, the Ontario government has repeatedly wasted money on senseless tax cuts and untargeted cash transfers, weakening the province’s fiscal capacity to address today’s and tomorrow’s challenges.
As we carefully flipped through the pages of this year’s budget, we hoped to be surprised, but we weren’t.
Program spending is not keeping up
The lowest bar for any government is not to make things worse. This requires adjusting program spending to inflation and population growth, ensuring that this year we have the same amount, per person, as we did last year. In budget talk, this is called maintaining existing service levels.
We examined total program spending and spending in health and education.
Total program spending is adjusted for inflation, using the government’s assumptions found in this budget, and total population growth, using the Ontario Ministry of Finance’s population projections.
In 2018-19, when the current government entered office, the province spent $12,795 per person (in 2025 dollars) on programs. The province’s budget outlook places per-capita program spending at $12,570 by 2027-28—a decline of 1.8 per cent compared to the government’s first year in office. This seemingly small percentage drop amounts to a program spending cut of more than $3.7 billion, given Ontario’s current and projected population.
Health spending has been adjusted to inflation and sector-specific population growth, which we calculated using the Ontario Finance Ministry’s population projections and Canadian Institute for Health Information’s (CIHI) health expenditure trends data.
Growth of health spending fell short of what was needed to surpass the main cost drivers of the sector by 1.7 per cent in 2025-26, 2.2 per cent in 2026-27 and 2.3 per cent in 2027-28.
Where the (insufficient) additional funding is spent also greatly matters. A recent CCPA report found that growth in public spending on private agencies is outpacing growth in spending on public hospital staff. Every profit dollar in health care is money not spent on serving Ontarians.
Education spending has been adjusted for inflation and population growth among children and youth (17 and younger).
In 2024-25, child care funding (operating and capital) accounted for 14 per cent of the Ministry of Education spending, compared to seven per cent in 2019-20. This increase is almost entirely due to federal transfers for the Canada-wide Early Learning and Child Care Agreement, forecasted to have added $1.4 billion to the ministry’s budget in 2022-23 and nearly $4 billion by 2025-26.
The breakdown of operating school board funding is not included in the budget; it is provided separately. The latest CCPA analysis of school board allocations found that funding dropped by $1,500 per student per year between 2018-19 and 2024-25.
Even with the significant federal child care funding boost, the Ministry of Education’s spending is not consistently keeping up with inflation and population growth, as shown in Chart 3. The outlook for the next years look particularly concerning as spending increases remain way below forecasted cost increases.
Post-secondary education is not being rescued
Ontario’s universities and colleges, which are chronically underfunded, received a major blow with the international student cap. This budget doesn’t address this fundamental, long-term challenge to Ontario.
Chart 4 presents post-secondary funding as a share of GDP over the past 10 years. In other words, how much Ontario invests in colleges and universities in comparison to the size of its economy.
Post-secondary spending was equivalent to 1.41 per cent of Ontario’s GDP in 2018-19. That amount is expected to drop to 0.97 per cent of GDP by the end of the budget outlook in 2027-28.
While the percentage changes might seem very small, Ontario’s economy is very large—so they translate into large funding shortfalls. To maintain 2018-19 spending levels by the end of their budget outlook (2027-28), the government would need to spend an additional $5.7 billion on post-secondary education.
The budget commits $750 million over five years for 20,500 STEM seats per year at colleges and universities, which is a mere band-aid for the collapse of the province’s higher education systems.
All the recent events and future risks—from Trump tariffs to the climate crisis to AI—have not prompted Ontario to invest in the long-term financial sustainability of colleges and universities.
Supports for business may not translate into help to workers, except for training
Ontario is already seeing significant job losses due to Trump tariffs and generalized economic uncertainty. The Employment Insurance program is a federal responsibility, but provinces can play a major role in supporting workers through an economic downturn. Unfortunately, this budget does not provide much assurance.
The three largest figures in trade and tariff-related investments include two re-announcements and one new initiative.
The re-announcements are $9 billion in deferred provincial taxes for 80,000 businesses, and $2 billion WSIB Ontario employer rebates (money that could conceivably be used to provide more generous and additional benefits to workers instead). The new Protecting Ontario Account ($5 billion) is designed to help businesses protect jobs, pivot, and transform as necessary, which is a program developed in tandem with the federal government.
Then there is a list of smaller initiatives, including an extra $600 million to the Invest Ontario Fund and $5 million for a Critical Minerals Innovation Fund.
What is clearly lacking are initiatives that support impacts to workers and communities directly. The Trade Impacted Communities Program is the exception. The initial amount is very timid—$40 million, and won’t do the heavy lifting necessary over the next months and years.
The good news on the trade and tariffs front is new money for training and skill development. The Ontario government is announcing an additional $900 million—over three years—for the Skills Development Fund. This money is likely to have a positive impact on affected sectors and the community. Ideally, the fund would become permanent and be complemented with investments in colleges and universities.
Keeping costs down—mostly for cars
The section of the budget titled Keeping Costs Down focuses on cars more than on people. It includes the $200 cheques sent to everyone in Ontario, regardless of income, during the last election. This was a one-time, expensive measure ($3 billion) with clear political motivation.
This section also includes the above-mentioned gas tax cuts, the removal of highway tolls, an amendment to the City of Toronto Act aimed at preventing municipalities from implementing road tolls.
Finally, the section renounces Ontario’s Fare One Program, which makes transfers between the TTC and Go trains free. A good policy that should be made permanent at once. It also re-announces efforts to lower electricity costs, without any details provided.
Doubling down on law-and-order rhetoric while failing to support vulnerable populations
In a section of the budget distastefully titled Cleaning Up Our Streets, Ontario makes some announcements that clearly cater to Donald Trump’s attacks, with more money allocated to tackling illegal border crossings, drugs, and guns. Among other things, it includes the purchase of two helicopters for the Niagara and Windors police services, at the cost of $57 million.
In the same section, the Ontario budget touches on issues and communities that we ought to treat with respect, not disdain. Including people living in encampments and other temporary shelters, people with experience in the judicial system, people experiencing mental health challenges, and others. At first glance, funding amounts like the additional $75.5 million for homeless prevention programs seem small in comparison to the challenges these groups face.
But what really stands out is the language used, and the disrespect to members of our society.
Revenues are not growing fast enough, leading to a visible deficit growth
Provincial revenues can grow in one of three ways: the provincial government increases taxes on corporations, personal income, and levies on specific activities; the economy grows faster than anticipated, increasing revenues collected for a limited time; or the federal government transfers more money to the province. The sustainable option is to increase taxes rather than rely on favourable winds and generous federal governments, but that is not what Ontario has done in recent years.
The PC government has cut taxes instead of increasing them.
Notable tax cuts include the cancellation of the carbon tax ($1.9 billion in 2018), the elimination of license plate sticker fees ($1.1 billion in 2022), and the loss of LCBO tax revenues ($1.3 billion) due to the expansion of beer sales to corner stores. Between 2018 and 2024, the Ontario government lost $7.7 billion of revenue to tax cuts.
In addition to not spending as much as necessary on programs, the government has relied on increased federal transfers and favourable economic conditions (in certain years) to maintain revenue levels.
Luck is running out. Economic growth forecasts look gloomy. And, at this point, Ottawa is not promising to rescue provinces directly.
Still, the Ontario government is cutting more taxes. The 2025 budget makes the reduction of the gas tax permanent, resulting in an annual loss of $1.8 billion. The budget is also removing tolls from Highway 407 East, which will cost $94 million annually.
The long-term impact of these tax cuts is visible in Chart 5. Ontario’s real own-source revenues are now expected to drop from $11,700 to $11,400 per person (in 2025 dollars) from 2024-25 to 2027-28, a decline of 2.6 per cent.
In addition to slowly starving key programs like education and health, the other result of cutting revenues year after year after year is that when emergency measures are necessary, the money is not there to pay for it. This year’s budget projects the deficit to grow from $6 billion in 2024-25 to $14.6 billion in 2025-26, mostly to pay for the business supports included under “other programs”. In a rich province, we could have been on much better footing.
Ontario’s preparing for rain, but more needs to be done to prepare for the storm
Despite Ontario premier’s visible appearances in the trade war with the United States, Ontario’s budget doesn’t deliver a robust plan to protect the province’s economy and people.
Underfunding trends persist in total program spending, education, post-secondary education, and health. Public services provide the support Ontarians need and good jobs that support the economy—investing in them is the best way to shield the province. But that’s not happening.
On the job protection front, we expect more—much more—given the alarming job losses we’re already witnessing. The 2025 budget fails to grasp the importance of protecting workers, not only for their families’ sake, but also as a mitigating strategy that prevents a deep recession.
Far too many Ontarians will be left twisting in the wind.
