The Agenda with Steve Paikin (Audio) - What's in Ontario's 2025 Budget?

Episode Date: May 16, 2025

Ontario's Minister of Finance Peter Bethlenfalvy joins Steve Paikin to discuss the government's budget for 2025.See omnystudio.com/listener for privacy information.

He was like a father figure to me. Unfortunately, found myself in a very vulnerable position. This is a story about a psychiatrist in Toronto accused of abusing two of his patients, which he denies. It's also a story about a system that is supposed to protect patients. From TVO Podcasts, I'm Krisha Collier, and this is The Oath. Subscribe today wherever you listen. Thanks for joining us tonight, everybody.

Without further ado, let's get you some highlights from this year's 2025-26 financial update for the province of Ontario. Sheldon, graphics if you would, as we go through what the economic growth projections are for the province of Ontario. Last year, clocking in at one and a half percent growth, this year down 0.8 percent. And then next year, they expect it only to rise to one percent.

What do we spend most of our money on? Well, of course, health care. That's always the number one item in a provincial budget. Ninety-one billion dollars for health care, followed by number two, education at $41 billion. Social services comes in at number three, but the number four item in the budget is interest on the debt, $16.2 billion. If you add up these three categories plus everything else we spend money on, it comes out to $232.5 billion in this year's budget. Now of course, we don't bring in enough taxes to pay for all that, so we're going to run deficits.

We did last year to the tune of $6 billion. This fiscal year the projection is to really explode, more than double, $14.6 billion of a net cash requirement for this fiscal year, coming down the following year to $7.8 billion and the projection is for a balanced budget in 2027-28. Tariffs, trade, and Trump. Yes, there will be protections in this budget for all of the above. A $5 billion ProtectOntario account in which there will be liquidity relief and job protection for businesses.

How about critical minerals? We hear a lot about that, particularly in northern Ontario. The budget puts $500 million into a critical minerals? We hear a lot about that, particularly in Northern Ontario. The budget puts 500 million bucks into a critical minerals processing fund to ensure that minerals are not just mined here, but processed in the province as well. There's an Indigenous Opportunities Financing Program, $3 billion for loan guarantees to help Indigenous groups develop energy projects, pipelines, mining and resource developments. As always with Ford budgets there are affordability measures. That temporary cut in the gas tax is now permanent and should save families 115 bucks a year.

There are also going to be no tolls on the east end of highway 407, that's the part of the highway the province still owns, and they estimate that'll save commuters, daily commuters, $7,200 a year. Now, what about our sins? The LCBO, this is interesting, you don't see this, in 2023-24, the province took in more than two and a half billion dollars from liquor and booze revenues, but it's going down. Last year, $2.16 billion and next year they anticipate even less, $1.85 billion. Got to ask the Treasurer about that. And if you like a little dooby-dooby-doo, the Ontario Cannabis Store is also showing revenues are down.

Last year, $244 million in revenue. This year, they anticipate $215 million in revenue. Again, a loss from the year before. So that's some of what's in budget 2025-26 for the province of Ontario. Now let's hear from the man whose name is on the cover of that budget. Joining us from the frost block at Queens Park,

Peter Bethlenfalvy, Ontario's Minister of Finance and the MPP for Pickering, Uxbridge and Treasurer, as I welcome you back to our program for your annual visit here. Let me note that the growth rates that you are anticipating for the next couple of years don't show us going into a recession but they're not all that buoyant either. So let's start there. How confident are you Ontario is not going to have a recession this year or next? Well first off great to be with you again, Steve, and on the show. Look, those are private sector forecasts.

We go out and get their opinions on the market and where they expect the growth to be. But look, I'm confident in Ontario's ability to deal with any sort of challenges, some of them external, like the tariff policy from south of the border, and position ourselves to combat those challenges. We've got some $30 billion of relief for these tariff response. And I think we've got a really good vision and plan for long-term economic growth. So I don't know what's around the corner, but I know that Ontario is very well positioned to deal with for whatever is around the corner.

Last year at this time when we spoke you were anticipating a deficit for this fiscal year of $4.6 billion. Today you reported it's going to be $14.6 billion. What's happened? Well I think the tariff policy is is affecting economies right around the world. I mean, we're seeing that firsthand. There's a lot of uncertainty in markets and capital investments. So this is the reason that you have a strong balance sheet.

As you know, I've been very fiscally focused over my seven years in government. And we strengthened our balance sheet. We've got two credit rating upgrades, the best debt metrics we've seen in a long time. And this allows us to respond and meet the moment. This is not the time to take your foot off the pedal of infrastructure spend and investing in healthcare. But we can't have record investments and sustain world-class services without a strong and prosperous economy.

So that our budget today was very much focused on our vision for how we're going to build this economy, make it the most competitive in the G7, because the tariffs if anything are a wake-up call, the status quo is no longer an option. Let's zero in on a few items in particular here and I want to start with post-secondary education. As you well know that sector is really going through some tough times. There are colleges that are shutting down campuses. There are institutions that are laying off people that are canceling programs. And I note in the budget today, you are proposing to spend less going forward than you are today or yesterday. Why?

Well, first off, the way the accounting works, you know, the colleges are consolidated on our balance sheet. The federal government that controls the amount of foreign students and clearly by putting a cap on foreign students that is decreasing the revenues but also decreasing the expenditures. So they kind of go in parallel. The second thing is, you know, colleges and universities have to make adjustments like everybody does in the real world and they're going through that. Thirdly, we're supporting them.

We announced last year 1.3 billion supports and just a few weeks ago, fourthly, we announced 750 million to increase and fund 20,500 science, technology, engineering and math positions at colleges and universities and we're supporting them through the Ontario Research Grant with another 300 million. So working together we can control what the federal government does with the amount of students but we certainly can work and we'll continue to work with colleges and universities. What you do have control over is the tuition freeze you

imposed seven years ago. Why don't you take it off and let them realize some more revenue? Well, we campaigned, in fact, campaigned in the recent election that we would keep them frozen to make it more affordable for people to afford an education. And you would know that the other parties said the same thing. So we have at least one thing we're unanimous on, that making it more affordable to get a world-class education is a strategy that we all support. Let me ask you about booze, because one of the constants of the Ontario budget, as I remember them going back many, many years, is that the province always realizes about

$2.5 billion from the LCBO, and I note going forward revenues are going to go down between $400 and $700 million, and I never thought I'd see that happen. What's going on there? Well the first thing is the taxes and markups that the frankly the previous government put on the industry were very injurious to to the industry and I'll give you an example the craft beer beer taxes, there are eight times, we inherited, are eight times higher here than in Alberta. So we've today announced the biggest cut in taxes for, for example, microbreweries, craft beer producers

in the history of Ontario. We reduced taxes and markups for spirits produced here in Ontario. We continue to provide supports for the wine sector. We cut the wine tax by 6.1%, all very much supported by the industry so that they can compete with a level playing field, that they can continue to invest in hiring people and growing

their product lines, and providing some fairness to the industry. So that's having an impact on the revenues, for sure. We also see consumption in some sectors going down and of course there are other factors but you know this is all about putting more money back in the pockets of businesses so they can grow in the alcohol sector and also making it more cost effective, keeping prices low for consumers. I also note there's going to be 30 million less revenue for the Ontario cannabis stores next year.

Are you guys at the ministry not smoking enough dope this year? What's the problem? No, no, no. No, I don't think that's the reason. You know, we've grown, it's about a quarter of a billion dollars starting from virtually zero a number of years ago. So they've done a good job. There's investments that we have to make in technology and infrastructure.

And we continue, we're very committed to the Ontario cannabis store footprint. You know, the goal there is to combat the illegal market. We've made tremendous progress at the same time. And we're going to keep reinvesting that money so we can keep combating the illegal market. You know that my approach in these interviews over the years is not to you know beat you up for the decisions that you make it's to find out why you make the decisions you make

and so I want to ask you about the the choice of tax cuts in this budget. You've proposed I think by my count about five and a half billion dollars worth of tax cuts over the next three years. But ironically, not the tax cut that Doug Ford campaigned on seven years ago and still has not fulfilled, which was the significant income tax cut that he ran on. So how come? Well, we decided to do tax cuts a different way.

We decided to do the effective tax cut like the gas tax cut we announced in 2022. We made it permanent today. We're proposing to make it permanent. That provided immediate relief. And you go back to back to 2022, the cost of living and affordability. We thought that this was a quicker way to put money in people's pockets. We've done the same, for example, in transit fares and through the one integrated fare.

That's saving the regular commuter some $1,600 a year. We dropped the tolls on the 407 East and proposing to. And that's going to save the commuter who uses that to go back and forth from work $7,200 a year. These are immediate, not down the road filing attacks, rebates to consumers and to businesses. I had a guy the other day here at Queens Park scream at me, Minister, you're saving me $4,000 for my 407 East traffic. Because I come from Markk andham and taking my kids to the

Pickering Hockey Rink and the Oshawa Hockey Rink I have to use the 407 to keep moving and you're saving me about $4,000 a year. That's in a really effective tax cut in my mind. Okay you would be very disappointed if I did not ask you about the hobby horse I raise every year so here it comes. Your government spent $5.9 billion last year subsidizing people's electricity bills, and you propose in this budget to jump that to $6.4 billion. Now, Treasurer, I ask you this every year. You and I make six-figure salaries, and the province of Ontario is helping to subsidize

our electricity bills. Why? Yeah, you're right. our electricity bills. Why? Yeah, you're right. I would be very disappointed if you didn't raise it again, Steve. So I'm ready for you. Now, first off, the $6.4 billion, just for clarity, about half of it is for businesses and a half of it is for residences. And the business portion, some $3 billion plus or minus, is also like tax relief for businesses to stimulate investment and capital,

particularly at a time that capital is uncertain right now what the impact of these tariffs are going to have. So I think that's good policy. And in terms of consumer relief, the other half, you know, this is not a time to increase costs on consumers, regardless of how much they make. This is for everybody. And we're committed to continue with this policy. Okay. As you know, you have a new federal counterpart now, Francois-Philippe Champagne. How well do you know him? Extremely well. In fact, we talked quite a lot. We talked a lot through the election.

We've talked for years. I've known him for a long time. We talked this morning. You know, he's a very energetic guy who has got a great grasp of economic policy, and I think we're going to continue to have a great relationship. And I will say, Prime Minister Carney and his team, I've known Mark Carney for a long time. He's a very capable person, and you know, we rely heavily on them with regard to the tariff negotiations. So, we're going to have a Team Canada approach. We said we'd work regardless of Stripe with anybody to advance Ontario's interests and

Canada's interests. And let me give you an example of that. Canada Free Trade. You know who Canada's number one trading partner should be? Canada. Canadian Free Trade and our Premier and our team, Vic Fidelity and others are leading the charge that we're taking down all the barriers here in Ontario. We've got Nova Scotia, New Brunswick and yesterday Manitoba to join

us and Prime Minister Carney and his team has signaled that they're going to be doing this by July 1st. Christia Freeland, who I've also worked with very closely, has committed to do everything they can to do this by July 1st. And let's all lock arms and boost our economy right here in Canada. Just out of curiosity, you and Monsieur Champagne are both Quebecers. What language do you speak in when you talk to him? It's a combination, Steve. We really switched back and forth this morning. It was like half

English, half French. His French is very good, like half English half French his French is very good I must say and his English is very good and so we do have great conversations I'll tell you one quick story a couple years ago I was holidaying and as I do in Quebec and in the summer in the gas bay and at a place called Capitan Home Art now I may have had a bit of a beard growing. He just popped in for a bite and I was there and there's a finance minister, he was the industry head at that point and we had a great conversation in the middle of the gas bay, just about three of us in a restaurant of 20 tables. So he's a

guy who's gonna get a lot of things done and we're gonna work together on the nation-building type projects. This is where I think we can really seize the moment, the public support to get the pipelines, to get the ring of fire, to get our nuclear capabilities. This is our time to really have the fortitude to make those big investments that will lead to economic prosperity, good paying jobs, go up the value chain for years to come. As you know I always like to finish off our interviews on a bit of a personal note and I note this year that you dedicated this budget to your I think 95

year old father now. Why'd you do that? Well you know I I'll tell you a couple years ago in fact last fall I think it was Labor Day I was in Halifax and we went to the museum there, the immigration museum. And I said, do you have any records on Nicholas Bethlenfalvy coming to this country? And sure enough, they found that he arrived in May of 1951 as a displaced person, as a woodworker. And so, you know, he came to this country with absolutely nothing, Steve.

That's the story of many Canadians. And this country gave him the opportunity to raise a family, to get a good job. He worked at Alcan. That's how I grew up in Montreal. And in one generation, I have a finance minister in the family. This is the type of thing that I think is the Canadian dream. This is what binds us as a country. I think we live in the greatest country on the planet. And I'm so proud of my father.

And I want to celebrate the hardships he faced. He left when he was 19 years old because of World War II. And he never saw his parents again. And he didn't go back to his home until the Iron Curtain fell in 1990. So yeah, it was a bit sentimental for me. And thank you for raising it. If not people like my dad, I wouldn't be here. And I wouldn't be giving back to this great country. That's a very nice story. And we hope his health is good at age 95

and that you two have many more years together. Thank you for coming on to TVO tonight. We always appreciate your annual visits here. Me too, Steve. And I think this may be our last budget together on the agenda. I want to thank you for your legacy of your body of work on the agenda over the years. It's quite remarkable.

So thank you. Well, you and I are about the same age. And I don't think you're slowing down. And I'm not going to either. I suspect this may not be the last one for us. So stay tuned. Oh, there you go. Well, here, breaking news, Steve Bacon, though.

I know you're gonna do a lot of other things you're continuing on, but I just, on this show, and yeah, hopefully we'll do more together. And I just wanted to thank you for your, what you've done so far and what you're gonna be doing. Very kind of you, Treasure. Thanks again. Thank you, Stephen.