Ontario Finance Minister Peter Bethlenfalvy tabled a fall fiscal update that showed trouble on the jobs front as the trade war impacts Ontario’s employment sector.
It projects a slightly smaller deficit, a path to balance books in two years, and sets aside more money for tariff-impacted businesses. It also shows LCBO revenues tumbling and revenue from alcohol tax falling.
Jobs trouble
The update shows growing trouble in the jobs market as a result of the trade conflict with the United States. The unemployment rate is expected to grow this year to 7.8 per cent from seven per cent in 2024.
The government says the unemployment rate will remain high for years, at a projected 7.6 per cent in 2026, and seven per cent in 2027.
Deficit
Ontario’s 2025-26 deficit is projected to be $13.5 billion, an improvement of $1.1 billion from this spring’s budget. It shows Ontario is still on a path to balance books in two years, with a forecast deficit of $7.8 billion in 2026-27 and a surplus of $0.2 billion in 2027-28.
Tariff help
The update sets aside more money in the way of loans for tariff-impacted businesses by providing an additional $100 million for the Ontario Together Trade Fund, which the government says will “further help small and medium-sized enterprises.”
However, other funds and various tax credits introduced in the 2025 budget have been slow to reach their intended targets. The $5 billion Protecting Ontario Account has only awarded a $100 million loan to Algoma Steel.
Dwindling LCBO revenues
LCBO and alcohol tax revenues are falling sharply, more than a year after the Ford government opened the alcohol market by allowing convenience, grocery, and big-box stores to sell beer, cider, wine, and ready-to-drink beverages.
LCBO revenues tumbled to $1.8 billion this year from $2.1 billion last year, and beer, wine and spirit taxes fell to $415 million this year from $510 million last year. This despite the government boasting in the fiscal update that, “Overall sales in convenience stores have risen by an average of 12 per cent” and that “VQA wine sales have experienced an increase of approximately 79 per cent.”
The numbers show that the opening of the alcohol market has come at a significant cost to Ontario coffers. It is not clear to what extent the absence of American alcohol has played a role.
Transportation short on details
The update mentions the Ford government’s Highway 401 tunnel proposal, the construction of Highway 413, and the Bradford Bypass but attaches no cost to them.
Pre-announcements
As was previously announced, the economic statement includes an HST rebate for some first-time homebuyers and $1.1 billion for home care.
It also includes changes to election rules like scrapping fixed election dates and raising the political donation limit to $5,000.
NDP response
Ontario NDP leader Marit Stiles said the fiscal update failed to “deliver a real plan that families across Ontario urgently need as the cost of living rises, the job crisis worsens, and the housing crisis deepens.”
“Families want stability and a fair shot at getting ahead,” said Stiles in a statement. “Today’s announcement did not move Ontario any closer to that.”
