Rapid Recap: 2026 Ontario Fall Economic Statement

Thursday, October 29, 2026 – Ontario Finance Minister Peter Bethlenfalvy presented the 2026 Ontario Economic Outlook and Fiscal Review: A Plan to Protect Ontario this afternoon. The fiscal update outlines the government’s economic response to global market volatility, rising U.S. tariffs, and lower revenue projections. It focuses on key economic and competitiveness priorities, such as:

Industrial sector support: Fortifying Ontario’s industrial base of key industries, including automotive, steel, critical minerals, and energy.
Tax relief: Enhancing competitiveness through business capital investment tax incentives, including immediate capital writeoffs.
Regulatory streamlining: Reducing red tape and expediting business permits and approvals.
Fiscal flexibility: Maintaining structural deficits until 2029-30 to enable a nimble spending response to economic headwinds and safeguard core public services.

The statement reinforces the province’s immediate strategy: prioritizing economic stabilization, targeted sector support, and protection of core public services like health care and education over a near-term balanced budget. The Minister has noted publicly that baseline health care funding remains protected.

The provincial deficit for 2026–27 is projected at $16.9 billion, representing a $3.1-billion increase over the 2026 Budget projection. Deficits are forecast at $12.7 billion in 2027–28 and $6.7 billion in 2028–29, delaying a return to balance until 2029–30. Real GDP growth is projected at a slowed 0.5% in 2026 and 1.5% in 2027. Total expenditures increased by $4.4 billion for 2026–27, primarily due to a $3.8-billion addition to the provincial contingency fund to hedge against trade and economic risks. Net debt-to-GDP stands at 37.4%, relatively high among the provinces.

Lower tax revenues due to U.S. tariff impacts are driving the deficit. The government confirmed it will not introduce new tax increases, focusing instead on internal agency reviews to find efficiencies and manage headcount through attrition rather than public sector layoffs.

Health Care Priorities

Health sector spending is projected at $100.7 billion for 2026–27 (40.7% of total provincial expenditure), up from $97.5 billion in 2025–26. Annual growth is projected between 2.3% and 3.3% over the medium term, reaching $106.2 billion by 2028–29. However, in its September 2026 report, the Financial Accountability Office of Ontario predicted funding shortfalls of $2 billion by 2027-28 and $3.8 billion by 2028-29. The province reiterated its commitment to avoid health care spending cuts.

Many of the health priorities in the document were already announced previously. They include:

Hospital Wait Times: Continued deployment of $47 million for Emergency Department Action Team to help 26 hospitals across the province apply Lean methodologies and help reduce wait times.
Hospital Capital Projects: Highlighted projects underway at Halton Healthcare, Hamilton Health Sciences, Unity Health Toronto, Geraldton District Hospital, University Health Network, Brant Community Healthcare System, and Windsor Regional Hospital.
Long-Term Care Capital Builds: Provided an update on new homes and renovations, including 70 completed projects, representing 5,063 new beds and 5,170 upgraded beds, as well as 95 projects under construction or approved to start construction, representing 9,664 new beds and 6,524 upgraded beds to modern design standards.
Primary Care Progress: More than 500,000 Ontarians connected to primary care over the past two years as part of the $3.4 billion Primary Care Action Plan.
Health Workforce Support: Highlighted the pre-existing commitment of $220 million over four years to expand the Ontario Learn and Stay Grant for family medicine residents practising comprehensive primary care in Ontario for five years.
Over-the-Counter Hearing Aids: New proposed legislative changes to permit over-the-counter sales of hearing aids for mild to moderate hearing loss while maintaining Assistive Devices Program funding.
HART Hubs: $560 million for 29 Homelessness and Addiction Recovery Treatment (HART) Hubs serving over 46,000 individuals.

Pressing Ottawa on Federal Health Transfers

The government devoted a significant portion of the statement to the question of Ottawa paying its fair share. The government does thank the federal government for renewing funding for the bilateral funding agreements for the National Strategy for Drugs for Rare Diseases, but takes the opportunity to point to the gap in funding on other fronts. The document highlights that, from 2017–18 to 2025–26, Ontario’s health sector expenses increased by $38.5 billion, while federal funding for health care has only grown by $8.8 billion. If Ottawa does not seek to renew commitments beyond 2027-28, Ontario states that hospitals, health care providers and families would be forced to contend with the impact of an almost $1 billion annual cut in federal health care funding by 2028–29.

Along with the other provinces and territories, Ontario is calling again on the federal government to make permanent the 5% minimum growth rate guarantee for the Canada Health Transfer that is set to end after 2027–28 and provide long-term health care funding to support mental health and addictions programs, home and community care, long-term care, and other essential programs.

Life Sciences Priorities

The Fall Economic Statement positions life sciences as a strategic growth engine for Ontario’s economy, but contains little in terms of new initiatives.

The most significant new initiative is Ontario matching updates to the federal Scientific Research and Experimental Development (SR&ED) with its own support. The province is restoring capital expenditure eligibility—including high-performance computing, testing tools, and prototyping equipment under the Ontario Research and Development Tax Credit and Ontario Innovation Tax Credit. This measure is expected to provide an estimated $50 million in tax relief over three years across around 700 eligible companies.

At a higher level, the government further announced over $8 billion in new relief for business capital investment. This $8 billion provincial tax relief measure, which is the provincial component of the federally announced Productivity Mega Deduction, would lower the cost of business investment by permanently allowing businesses to immediately write off 100 per cent of the value of a wide range of assets. This initiative complements the recent federal tax break and complements the $9 billion joint federal-provincial package for the steel, auto, energy, and critical mineral sectors. The measures reduce Ontario’s marginal effective tax rate to 3.6%.

Other Signature Initiatives & Updates

Key initiatives across government portfolios include:

Program & Service Review: A new initiative whereby Ontario is strengthening its stewardship of public funds through a coordinated enterprise-wide approach to fraud, error, waste, abuse, and improper payments.
- Building on evidence from major expenditure and claims-based programs, the government is advancing stronger controls, risk-based oversight and modern technology-enabled capabilities to improve the detection, prevention, and management of payment integrity risks.
- Initial efforts are focused on high-value programs where the greatest opportunities exist to strengthen accountability and value for money, with successful approaches designed for reuse across ministries over time.
- The government manages $50 billion in annual payments across health, social assistance, and other major programs, representing hundreds of millions of transactions each year with continued growth in both health and social services expected.

Buy Ontario policy: Continuing to look at the next step(s) for Buy Ontario policies, including consequences for non-compliance (i.e. withholding funding) and advancing bulk purchasing initiatives that list Ontario and Canadian suppliers. There is currently a public consultation underway with submissions due by November 22.

- Skills Development Fund: No new funding tranches released, but the government confirmed that Round 6 selections for the Training Stream are complete and are being rolled out.

Voluntary Digital ID Program: Echoed the announcements from last week on the plan to advance the province’s digital identity program, though it will be optional and physical ID will remain available for those who prefer it.

AI Industrial Strategy: Still in development with no updates on timing for release.

STEM Seats: Echoed the commitment earlier this year to invest $1.7 billion to support 70,000 additional seats at publicly assisted colleges and universities in high-demand fields like science, technology, engineering and mathematics (STEM), AI, health care and the trades.
Capital Plan: A $210 billion over the next 10 years in hospitals, transit, housing infrastructure, and highways.

Opposition Response

Official Opposition NDP Leader Marit Stiles and NDP Finance Critic Jessica Bell said the 2026 Fall Economic Statement fails to deliver affordability solutions for Ontario workers. Stiles called it “an admission of failure.” She pointed to rising costs during a trade war and criticized government spending on hotel stays. Bell pointed to the problems of a growing deficit, job losses and a lack of affordable homes, and said the government is spending more while delivering less. The NDP said it will keep proposing measures to put money back in people’s pockets, end health care wait times, and build affordable homes.

Liberal Party Finance critic Stephanie Bowman raised concern over weakening economic parameters, noting job creation lags budget estimates by 13,000 jobs, and housing starts are down by 16,000. She was also critical of the government not flowing funding quickly to business through the Protect Ontario account. She expressed concern over rising debt servicing costs relative to program spending growth (0.9%).

Ontario Green Party Leader Mike Schreiner also expressed concern with record deficits, lost jobs, and affordability over the eight-year term of the Ford government. His party is advocating for a wealth tax on high-net-worth individuals to help fund affordable housing, energy, and social assistance.

Santis Insights

Amid weaker economic growth and the Ford Government’s hesitancy to raise taxes to cover the shortfall, the PCs can be expected to fall back on initiatives like the announced program and service review, as they seek to phase out public sector jobs through attrition and bring more discipline to public spending. For stakeholders, this will mean ensuring budget submissions, grant applications, and funding proposals:

Bring forward clear data on the results programs deliver with existing funds
Make a strong business case or value-for-money case on why the funding is needed
Begin advocacy planning earlier for large funding requests or major projects

Health care spending remains protected from budget cuts heading into the 2027 Ontario budget planning, but both Ontario and the provinces will be put in a difficult position if the federal government does not renew bilateral funding agreements or deliver on meaningful Canada Health Transfer increases beyond 2027-28. A lack of matching federal funding in the coming years could mean program reductions and cuts. At the same time, the federal government has unexpectedly blinked on mental health and home care funding amid austerity measures, and we expect Premiers to press their advantage. Stakeholders should seek to lend their voices to provincial advocacy with the federal government to both advance shared objectives and earn political goodwill.

Perhaps the most notable trend for the Progressive Conservative government is its consistent investment in research across successive budget cycles, an unusual priority for conservative governments in other provinces. That commitment runs from the $5 million wet labs investment in 2025 through to today’s SR&ED enhancement and broad-based capital write-offs. It speaks to the fact that the Ford Government is seeing value in these investments, including support for its economic growth agenda. With the door ajar, stakeholders should continue to push for additional investments in research in Ontario as a way to strengthen and diversify the economy. Health and life sciences organizations should align budget proposals with priorities like domestic capability, economic impact, and regulatory streamlining (e.g. the province is cutting clinical trial start-up times down to as little as 45 days).

What’s Next?

The government will move the Fall Economic Statement legislation through the legislature this fall and look to pass it before the winter break.

Organizations seeking to influence fiscal and health policy should begin preparations for the province’s annual pre-budget consultations, expected to formally launch in November, although the submission portal is already open. Santis Health will provide further details as consultation schedules are finalized.

For further information regarding Ontario’s Fall Economic Statement or pre-budget consultation strategy, contact one of our Santis Health experts:

Clare Michaels – clare.michaels@santishealth.ca
Devon Ryan – devon.ryan@santishealth.ca
Alexander Rotman – alexander.rotman@santishealth.ca