LILLEY: Doug Ford boosts spending again as tariffs drag down Ontario's economy
· Toronto Sun
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Ontario is taking in more money than ever, but tariffs are dragging down the economy and government spending is growing even faster than revenue.
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The Doug Ford government released its fall economic update on Thursday and while revenue is up, spending is up even more.
The cost to service the debt will hit $17.4 billion this year with only health care and education costing more. That means we will be spending more on interest payments on the debt than we spend on all of postsecondary education at $13.9 billion or the justice system at $7.2 billion.
The deficit for this year is now projected to be $16.9 billion instead of the $13.8 billion projected in the budget.
Spending outpaces revenue
This isn’t being driven by declining government revenue as Ontario deals with the impact of Donald Trump’s tariffs . It’s being driven by spending.
Ontario government revenue is up by $2 billion compared to what was projected in the budget, but program spending is up more than $4 billion and the government is adding $3.8 billion to its contingency fund.
“Program expense is projected to increase by $4.3 billion in 2026-27, primarily due to the top-up to the contingency fund to protect key public services, address compensation-related pressures and provide flexibility to respond to unforeseen risks,” the fiscal update said .
As usual, governments have a spending problem, not a revenue problem, and the Ford government is no exception. From a fiscally conservative point of view, the best thing you can say is it’s worse elsewhere.
Ontario’s deficit amounts to 6.8% of the province’s total expenses. In Ottawa, the federal government’s deficit amounts to 11%. Similarly, Ontario spends 6.7 cents on every dollar it takes in to service the debt. Ottawa spends 11.1 cents on the dollar.
Neither is a good number for those of us who want balanced budgets and debt paid down, but clearly Ontario’s lower figure is preferable.
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Tariffs hit growth
The government blames the fiscal situation on tariffs, which are hitting Ontario’s economy harder than other parts of the country.
In this instance, though, the tariff impact isn’t showing up in spending, but in economic growth.
Ontario’s real GDP growth fell from 1.5% in 2024 to 1.3% in 2025 as the tariff impact started to hit during the year. The update projects real GDP growth of just 0.5% this year and 1.5% next year under current conditions.
There is a slower growth projection predicated on the U.S. withdrawing from the Canada-U.S.-Mexico Agreement and keeping section 232 and 338 tariffs in place. There is also a faster growth scenario in which Ontario’s economy could be growing by a healthier 2.2% starting next year.
“The faster growth scenario assumes that most tariffs and countermeasures imposed by the United States and Canada are removed in the near term. Under this scenario, Ontario’s economic output recovers starting in 2027 and through the projection period,” the statement said.
That’s why the Mark Carney federal government needs to get serious about securing a real deal with the Americans. Expanding trade with Europe , India and other countries across Asia is all well and good, but that will take time.
Jobs are on the line
The tariffs are causing damage to Ontario’s economy and the longer they remain in place, the deeper the damage.
The danger isn’t theoretical. Ontario workers are already feeling the effects. We’ve already seen layoffs at Algoma Steel in Sault Ste. Marie, Stelco in Hamilton , GM in Oshawa, Stellantis in Windsor and Ivaco Rolling Mills in L’Orignal.
We don’t need more layoffs, more uncertainty or more excuses. Ontario needs a deal that lowers tariffs and lets people get back to building, making and selling things.
Every day these tariffs remain in place, the cost grows. Ontario workers are paying the price. It’s time to get a deal done.