Rae says 2025 budget strikes “good balance” as U.S. tariffs and slowed housing starts put pressure on Ontarians

CONNOR LUCZKA, Local Journalism Initiative Reporter

Uncertainty from tariffs and the current U.S. administration are at the core of this year’s provincial budget.

Despite those challenges, Perth-Wellington MPP Matthew Rae said that the 2025 Ontario budget, which was released on May 15, “strikes a good balance for the times we’re in.”

“There's so much uncertainty with the news coming out of the U.S., whether there'll be tariffs on x, y or z products each and every week,” Rae said. “… And so the budget really lays out a path to balance in 2027-2028, but really the focus of this budget is being there for workers, families and communities, ensuring that we're protecting Ontario and that we continue to make those necessary investments.”

The government projects a $14.6 billion deficit this fiscal year, a $7.8 billion deficit in 2026-2027, and a relatively small $200 million surplus in 2027-2028. According to the budget, this trend is driven by increased investments to affordability, public services like health care and education, infrastructure, and supports for the aforementioned tariffs.

About $33 billion in capital investments are planned for this fiscal year, with much of that investment meant to support a potentially stagnant year for the private sector. As Rae said, with such uncertainty, many businesses are waiting for calmer times for big capital projects.

Additionally, for immediate relief, the province is creating a $5 billion Protecting Ontario Account, a fund aimed to provide liquidity for businesses and workers facing tariff-related disruptions.

Manufacturing, agriculture and tourism are three sectors which U.S. tariffs stand to deeply affect moving forward, and those three are integral to Stratford and area’s economy. Rae said there are “a lot” of initiatives in this year’s budget to support those sectors.

The Ontario Made Manufacturing Investment Tax Credit will be expanded. If a business is putting in a new equipment line, for instance, it would stand to get a 10 per cent tax break. In the next couple of years, it will be increased to 15 per cent, standing to inject $1.3 billion back into businesses across Ontario.

Additionally, the province is set to defer select provincially administered taxes for the next six months in order to alleviate the pressure small businesses are facing. That relief, Rae said, will give tourism organizations more capital during this year’s challenging season.

“We're making the gas tax cut permanent, which will save the average Ontario family $115 annually moving forward,” Rae further said. “And I know we're facing many challenges and economic uncertainty, but continuing to advocate for affordability and making sure Ontario is the most competitive place in the world to do business is obviously a key goal of our government, and I'll work to ensure that we're achieving that goal.”

Another issue identified in the budget is the housing market. In 2021, the provincial government announced a goal to have 1.5 million homes by 2031, needing an average of 150,000 homes a year to reach that goal. This year’s budget predicts 71,800 housing starts, sharply lower than the 92,300 starts that were projected in last year’s budget.

To tackle that issue, Rae said that his government will provide an additional $400 million this year for housing enabling infrastructure, something that both municipalities and home builders alike need to be able to get housing starts going. The fund will approach $3 billion over the next couple of years he said, according to this budget.

“We can't predict what's going to happen next month, unfortunately, which is not great for markets or business investment, which is what the premier and myself and others have been hearing. A lot of companies are looking to invest in Ontario, but a lot of that capital is now, unfortunately, sitting on the sidelines because of the economic certainty U.S. President Trump has created. I will give Minister (Peter) Bethlenfalvy, the Minister of Finance, a lot of credit – and the premier – for tabling a budget.

“Our federal colleagues have chosen not to at the moment, which I think is a mistake in the long run,” Rae went on to say. “The people of Ontario and Canada deserve to see a fiscal plan moving forward.”

The newly elected federal government announced a fall budget earlier this month, reversing course after facing sharp criticism for suggesting that no budget would be tabled at all in 2025.

Prime Minister Mark Carney promises that budget will be a “comprehensive, effective, ambitious, (and) prudent” plan.

To read the full 251-page Ontario budget, visit https://budget.ontario.ca/2025/pdf/2025-ontario-budget-en.pdf.