With Ontario’s municipal elections behind us, it’s back to business at Queen’s Park. The Ford government presented its Fall Economic Statement and its accompanying legislation as well as tabled its eighteenth red tape reduction bill.
ONTARIO
Trump Tariffs Weigh on Ontario’s Economy and Fiscal Position
Finance Minister Peter Bethlenfalvy delivered the government’s 2026 Ontario Economic Outlook and Fiscal Review: A Plan to Protect Ontario – also known as the Fall Economic Statement – this week and the news wasn’t good. Ontario’s economy continues to feel the weight of President Donald Trump’s prolonged tariffs, which the Ford government has cited to justify its spending decisions and increased contingency provisions.
Here are the highlights:
Higher deficit: $16.9-billion deficit for 2026–27, up from the $13.8 billion forecast in Budget 2026.
Kicking the can of balanced budgets down the road: Balanced budgets are now expected to return in 2029–30, rather than 2028–29 as outlined in Budget 2026. Projected deficits for the coming years include $12.7 billion in 2027–28 and $6.7 billion in 2028–29.
Sluggish economic growth: Real GDP is forecast to grow just 0.5% in 2026, but Bethlenfalvy expects that to improve to 1.5% in 2027, while unemployment is projected to average 7.2% in 2026.
Over $8 billion in additional business-investment tax relief over five years: The government is proposing accelerated write-offs that would allow businesses to immediately deduct the cost of a wider range of eligible investments, including software, patents and certain equipment. The caveat here is that implementation depends on the federal government passing legislation to implement its proposed Productivity Mega Deduction.
More tariff supports for hardest-hit industries: The Minister of Finance highlighted the previously announced joint Canada–Ontario action plan that would deliver an additional $8.7 billion to support the steel, automotive and critical minerals sectors.
Speeding up permitting and approvals: The FES highlights the Building Ontario Faster Act, 2026, which tackles archaeological assessments for construction projects, amends approvals for landfills, and aims to speed up the expansion of Highway 69.
The overall reaction to the FES has been generally mixed. Business groups like the Canadian Federation of Independent Business and the Ontario Chamber of Commerce welcomed the $8 billion Ontario Competitiveness Tax Cut. It complements previously announced measures, including the small-business tax-rate reduction, lower WSIB premiums and permitting reforms. However, their enthusiasm was tempered by their desire for more. The CFIB specifically has called for a higher small-business tax threshold as well as a higher Employer Health Tax exemption. While the spirit of the government’s continued effort to slash red tape is welcomed, business groups want to see the government go even further, eliminating red tape that will have real, on-the-ground impacts for day-to-day business operations.
However, bank economists’ assessments are more nuanced than simply treating the deficit and spending as runaway trains. TD notes that the current-year deficit, at 1.3% of GDP, is relatively in line with the long-run average. Desjardins attributes approximately $7.4 billion of the $16.9-billion cumulative deterioration in the three-year fiscal outlook to larger reserves and contingency provisions, alongside lower forecasted tax revenues in later years.
The government is spending more while the economy trudges along. So, the critical question is whether these measures will improve the economy enough to put the government’s fiscal (or gravy, depending on who you talk to) train back on track. Recall our September 20th edition of To the Point, where we analyzed the government’s release of its Public Accounts and raised important questions about how long the government could keep injecting money into supports for tariff-battered industries without seriously addressing conditions for growth, regardless of US tariffs. The government appears to be taking the latter more seriously with red-tape reductions and business tax reductions, and it should be applauded for that. However, we are now tasked with assessing both whether prolonged tariff relief is preserving viable businesses and jobs, and whether these economic competitiveness measures are enough to lift Ontario’s economy out of the trenches.
In addition to the tax law adjustments, the Building Ontario Faster Act, 2026 – the latest in a long line of red-tape reduction bills – aims to make further changes to several regulatory barriers that are seen as a hindrance to businesses seeking to invest and expand in Ontario. Here are some of the key legislative changes and associated proposals.
First, the government is seeking industry input on legislative and regulatory changes to increase transparency around Blue Box fees, strengthen oversight and rein in costs associated with the Blue Box system. This is most relevant to producers, retailers and producer responsibility organizations seeking more predictable fees and contract terms.
Second, consultations have launched on proposed changes to landfill approvals and waste diversion requirements. The proposals aim to expand landfill capacity and would remove municipal support requirements for new large landfill proposals, with implications for municipalities, waste operators and businesses managing waste.
Third, the government has proposed amendments to the Public Transportation and Highway Improvement Act to permit (pun very much intended) the Minister of Transportation to establish codes of practice and reporting requirements for lower-risk activities near provincial highways. Property owners, developers and infrastructure proponents who have projects adjacent to highways are the key beneficiaries of this proposed change.
Beyond these changes, the government is also seeking input on proposals that would create an underground infrastructure map to support its digital-twin initiative, allow certain project owners to align annual construction holdback releases without removing the 10% requirement, and standardize documentation requirements for workers certified in other provinces to speed up certification. These changes are primarily directed at construction and infrastructure, utilities and telecommunications, engineering, and companies hiring regulated professionals and tradespeople.
The Ford government’s moves in the first week weren’t limited to tabling legislation. In addition to introducing the Building Ontario Faster Act, the Ford government also launched regulatory consultations on harmonizing municipal road construction specifications and proposed changes to the Buy Ontario infrastructure design requirements. The former proposes to make 85 additional municipal road construction specifications mandatory for applicable projects with procurement start dates on or after July 1, 2028, while the latter would require public-sector infrastructure design specifications to accommodate domestic goods and services where feasible, rather than unnecessarily exclude them.
The initial launch of the Buy Ontario directive a few months ago got off to a rocky start. Confusion and lack of clarity around the rollout resulted in a chorus of industries and stakeholders imploring the government to adjust. To the government’s credit, it is trying to right what it got wrong out of the gate, and we are working diligently with our clients to make sure it does.
Overall, the Building Ontario Faster Act is welcome legislation because it reflects the government’s effort to respond to stakeholder concerns. And yet, useful changes developed with stakeholder input are not, on their own, proof that Ontario is becoming meaningfully more competitive.
We will be watching closely whether these measures translate into faster approvals, additional investment and stronger growth, regardless of whether a trade deal with the United States is reached.
Christopher Mourtos, writing on behalf of ONpoint Strategy Group
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