Martin Regg Cohn: Trump’s trade war ballooned Ontario’s deficit. Doug Ford’s irresponsibility made it a record - Toronto Star

The fall economic statement offers pretensions to “sound fiscal management” writes Martin Regg Cohn, but read the fine print to find an admission of “deterioration.” 

Ontario Finance Minister Peter Bethlenfalvy delivers the government’s fall economic statement in the legislature in Toronto, on Thursday, Oct. 29, 2026.

Martin Regg Cohn is a Toronto-based columnist focusing on Ontario politics and international affairs for the Star. Follow him on Twitter: @reggcohn.

It is the best of budgets, it is the worst of budgets, even if not quite a budget.

Mostly, it’s a missed opportunity, in the worst of economic times.

Technically speaking, this week’s “Fall Economic Statement” from Finance Minister Peter Bethlenfalvy is more of a mini-budget, updating — and downgrading — the numbers in the official budget he released last March. Practically speaking, it will be overshadowed by the full-fledged federal budget coming Nov. 5.

But pay attention, because Ontario is ground zero in the trade war with America — which means the province is bearing the full force of Donald Trump’s tariff tantrums. Hence Bethlenfalvy’s bad news budgetary predictions for Canada’s battered manufacturing engine.

Ontario’s economic growth is fizzling anew, while America keeps on chugging. Bethlenfalvy had predicted a modest one per cent increase in GDP for 2026, way back in his March budget, but he’s now cut that in half — to a meagre 0.5 per cent.

Compare that to the robust 2.1 per cent growth expected in America, four times better than Ontario’s economic activity. Predictions for new housing starts in Ontario have also been revised downwards from 70,300 to barely 65,100 — a drop of 7.4 per cent at the very time Premier Doug Ford has been promising huge increases in supply.

Don’t blame Bethlenfalvy for sluggish growth, imposed on us by Trump. By all means, let’s give him credit for his (updated) candour.

No, the fault lies not with the numbers, but the pretensions underpinning them. Running throughout the presentation are boasts of “prudent fiscal management,” “sound fiscal management” and “responsible fiscal stewardship.”

You have to read the fine print to find a quiet admission of the “deterioration” in the budgetary outlook thanks to a persistent deficit that has bounced back up to $16.9 billion. Bethlenfalvy is doing the best he can with what he has to work with — and who he has to work for.

He has endured as Ford’s treasurer, where others have faltered and failed before him, because he knows how to bend and borrow with the winds — both fiscal and political. A seasoned Bay Street hand, Bethlenfalvy can’t even begin to balance a budget while also juggling a politically irrepressible and fiscally irresponsible premier.

To be clear, there’s nothing wrong — and everything right — with deficit spending in an economic emergency, which this trade war urgently qualifies as. Vulnerable industries merit protection from Trump’s impulses, just as vulnerable people also deserve protection in an economic downturn.

As Bethlenfalvy told the TMU Democracy Forum that I hosted just before his March budget: “A finance minister has one hand on his or her wallet, to be sure, but make no mistake — in this country, a finance minister … has his or her hand on their heart as well. You’ve got to balance the two.”

The good part of this mini-budget is that Ford’s government has seen the light, notwithstanding its right-wing instincts — allocating big money where and when it’s needed. Ford has just announced Queen’s Park will chip in alongside Ottawa with billions to support the ailing steel, auto and mining sectors. And he keeps reannouncing that $30 billion is available (albeit unspent) in other tariff relief.

The premier’s obsession with digging himself into a deeper fiscal hole with his proposed “401 tunnel expressway” remains a road to nowhere — promoted again in the budget, but pointedly ignored by Ottawa as it scours the country for worthy national projects to ramp up. That said, the Ring of Fire (which has headlined provincial budgets since 2010) is finally gaining traction — and recognition from the federal government, which is matching Ontario with $1 billion in fresh funding.

There are generous tax writeoffs to encourage corporate investment in new equipment at a time when Ontario must retool. Behold, too, the Tory heresy of “Ontario’s first-ever defence industrial strategy” — you read that right, industrial strategy.

But for all the sensible talk of strategy, Bethlenfalvy is burdened by bad tactics on taxes and subsidies that have undermined Ontario’s budgetary posture. “It starts with cutting taxes,” the finance minister argues, but it has to end somewhere.

Case in point: Ford has presided over an overly generous electricity subsidy ever since taking power in 2018 (after his Tories goaded the last Liberal government into this misallocation of provincial tax revenues for the benefit of individual ratepayers). Now, as the recurring rebate approaches $7 billion a year, Bethlenfalvy has capped it for Ontario’s most sprawling homes — the new limit will be 1,200 kilowatt-hours (average consumption is barely 60 per cent of that) in order to “ensure sustainability” amid the unreality of this electricity subsidy.

By indulging in perennial pre-election giveaways — cuts to gasoline taxes, licence plate renewal fees, road tolls and more — Ford plundered the province’s fiscal capacity in good times instead of keeping those revenues in reserve for a rainy day. That has reduced Bethlenfalvy’s margin of manoeuvre by billions of dollars.

Now, at a time of growing inflation, rising interest rates, persistent unemployment and a protracted trade war, Ontario needs to pack the biggest possible punch. Too bad Ford squandered those fiscal tools prematurely — putting his personal re-election over our economic recovery when it matters most.

Error! Sorry, there was an error processing your request.

There was a problem with the recaptcha. Please try again.

You may unsubscribe at any time. By signing up, you agree to our terms of use and privacy policy. This site is protected by reCAPTCHA and the Google privacy policy and terms of service apply.

Opinion articles are based on the author’s interpretations and judgments of facts, data and events. More details

Martin Regg Cohn is a Toronto-based columnist focusing on Ontario politics and international affairs for the Star. Follow him on Twitter: @reggcohn.