Ontario government’s 2025 budget fails to meet the moment
In the face of U.S. economic aggression, the 2025 Ontario Budget is full of rhetorical urgency. Our future prosperity, it declares, hinges on “bold, lasting change that makes Ontario the most competitive economy in the G7.”
After such an impassioned start, you would be forgiven for expecting the budget to lay out a vision for this bold and lasting change. Don’t get your hopes up. The economic overhaul that awaits in the next few hundred pages is the same assortment of forgettable tweaks we’ve come to expect from recent Ontario budgets – a disconnected grab-bag of tax credits and minor giveaways to industries from wine to shipbuilding, coupled with the typical infrastructure and training investments that could have been copied and pasted from years past.
This ongoing failure to reimagine and rebuild our systems so that they respect, protect, and fulfill everyone’s economic and social rights is an economic blunder as well as a moral failure. Some ambition and urgency for investment and reform is overdue, to position our economy and society for a better future.
With that, let’s dive in.
1. The big picture: Don’t believe the spending hype
With headlines stressing the “record $232.5B budget” and Ontario’s “massive deficit” of $12.6 billion projected for 2025-26, all major publications continue to miss the bigger story: The idea that Doug Ford is a tax-and-spend politician doesn’t hold up to scrutiny. Fixation on the top-line numbers of the budget only plays into the false narrative of bold government action in the face of economic turbulence.
As CCPA shows, once you factor in inflation and population growth, years of cuts to taxes and fees have eroded our ability to raise much-needed funds when Ontario already has the lowest per capita revenue in the country.
On the spending side, the only sector that has seen significant investment above inflation since 2018-19 is health, as shown in Figure 1.
Figure 1: Real program spending by sector over time (2024 dollars)
Source: Authors’ calculations based on Ontario’s Public Accounts and the 2025 Budget. Numbers for 2024/25 onward are estimates.
If we go a step further and control for population growth since 2018-19, the history of investment under this government looks much worse for most sectors. Figure 2 shows how real per-capita spending between 2018-19 and 2024-25 is down in K-12 education, post-secondary education, and social services. In these sectors, the budget allocates considerably less money to support each person – the definition of a service cut.
Figure 2: Percentage change in real per capita spending by sector, 2018-19 to 2024-25 (2024 dollars)
Source: Authors’ calculations based on Ontario’s Public Accounts and the 2025 Budget. Numbers for 2024/25 are estimates.
As for the deficit, it’s small compared to the size of the budget or the Ontario economy, and the government predicts a return to balance only one year later than predicted last year. A better measure of fiscal sustainability, Ontario’s net debt-to-GDP, shows an improving picture. Where last year’s budget predicted a ratio of 39.5 per cent in 2025-26, the government now predicts it will reach only 37.9 per cent this year, followed by a peak next year of 38.9 per cent before it begins to fall.
If the government is serious about investing in the future, there is certainly room.
2. Children, Community and Social Services
Once again, there is not much to highlight in this year’s budget related to social services. Ontario Disability Support Program (ODSP) rates continue to increase by inflation; Ontario Works rates remain frozen, forcing hundreds of thousands of Ontarians struggling to survive to live in even deeper poverty.
One bright spot is the investment of $175 million in the Ontario Autism Program, though there’s a lot of political spin in that number. The government has a habit of announcing an annual investment that sunsets each year, making the numbers sound bigger than they are compared to the prior year. Thus, despite investing $175 million, spending on the program in 2025 will only be about $60 million more than last year.
The slow withering of social services
Per Figures 1 and 2 above, the fiscal situation for social services is particularly dire. Per capita real spending on social services dropped 11 per cent between 2018-19 and 2024-25, and the new budget does nothing to change that trajectory. If you consider the sector’s share of the spending pie, in 2018-19 it made up 11.6 per cent of total program expenses, and this will fall to just 9.3 per cent by 2027-28. It would take an additional investment of $5 billion to bring social services back to its 2018-19 share.
It may be hard to believe today, but there was a time when Ontario spent a lot more of its budget on social services – a larger proportion than it did even on education. Over the past 30 years, however, successive governments have underinvested in this sector, allowing poverty and homelessness to fester even as our wealth as a society has doubled.
A new talking point: Growth first, social services later
During the recent provincial election, Premier Ford was pressed repeatedly about raising social assistance rates. By the end of the campaign, he settled on a response that he would invest in social services when economic growth allows: “We’re going to create the climate and the conditions to create more jobs, create more income, up to the coffers, so we can take care of people on ODSP.”
A version of this argument also appears in the 2025 budget: “We need a strong economy in order to support the world-class social services Ontario families count on. While our government will never waver in our commitment to these services, we are focused on protecting our economy so we can invest even more to continue to improve them.”
Putting aside whether this is a justifiable position, we can easily test whether the government has put its money where its mouth is. Looking back to 2018-19, the evidence shows that spending on social services is not linked to economic growth.
Figure 3: Social Assistance spending as a percentage of Ontario GDP over time
Source: Authors’ calculations based on Ontario’s Public Accounts and Expenditure Estimates. Numbers for 2024/25 are estimates.
Figure 3 shows how spending on Ontario Works and ODSP as a percentage of GDP has plummeted in recent years. Ontario is wealthier, but social assistance recipients have not shared in the benefits. If social services kept pace with economic growth, Ontario would be spending more than $2 billion more on each of OW and ODSP every year.
We shouldn’t take the Premier at his word when his actions tell a very different story.
3. Housing
A report from the Association of Municipalities of Ontario found 81,515 Ontarians experienced “known” homelessness last year, meaning they interacted with a government initiative or program that was able to count them. This number was up a startling 25 per cent in just two years.
Yet the budget offers no new investment to address the homelessness crisis. Instead of addressing the root causes, the government is pushing ahead with legislation that will punish people living in encampments, leading to increased displacement and greater risk for those who use drugs.
More beds announced in jails than in supportive housing
We know that addressing chronic homelessness begins with building deeply affordable, nonmarket housing units with wrap-around supports where necessary.
Addictions and Mental Health Ontario projects Ontario needs at least 36,000 new supportive housing units over the next decade to address the growing need and make up for years of underinvestment. The budget mentions a total of only 560 new units – not nearly enough to even begin to reduce homelessness.
The government may not be interested in funding supportive housing, but it is certainly not opposed to paying for new beds in other places. To advance its agenda of putting more people in jail and keeping them there longer, the budget includes funding for a total of 942 beds in correctional facilities across the province, revealing where the government’s priorities lie.
Despite the lack of progress on supportive housing, there is a sliver of good news for the mental health and addictions service sector. The budget announced $303 million over the next three years – enough for a four per cent increase in base funding.
Falling further behind housing targets
Turning to housing more broadly, the Minister of Finance is once again in the embarrassing position of tabling a budget that forecasts his government will badly miss its goal of building an average of 150,000 new homes each year for ten years.
As recently as October, the Minister of Housing was vowing the government would meet its targets, but the recent budget numbers suggest the outlook is actually getting worse, with projected housing starts revised down for every year through 2027-28. In 2025, Ontario will see only 72,000 housing starts – less than half the target and well below the 96,000 starts Ontario saw in 2022. Without greater supply and better regulation of rents in the private market, housing affordability in Ontario will only worsen.
It’s clear that we are not building ourselves out of this problem any time soon. An honest survey of our housing issues would suggest we pay more attention to rapidly housing people in need and to keeping low-income families in their homes.
4. Verdict
This year’s budget is named “A Plan to Protect Ontario.” What’s clear from reading the document and following the money is that only businesses will be protected, not people.
Sadly, centring corporate interests today and hoping this will benefit everyone tomorrow is a failed strategy. As we have shown, recent economic growth has not translated into more housing or social services for those most in need, and there’s no reason to believe the future will be any different.
Ontario really does need bold, lasting change, and it can’t come soon enough. But what we need is a strategy for prosperity from the bottom up. Doing more to support those in greatest need is not a luxury. Poverty, homelessness, and food insecurity are not only violations of our human rights commitments, but they also have multi-generational repercussions on our long-term productivity.
The 2025 budget fails to set Ontario on a path to social and economic prosperity and thus fails to meet the moment.