[Host]: Hundreds of pages, billions of dollars. The province's 2026 budget will shape the lives of Ontarians, but it's not something that makes for quick or easy reading. So TVO, today's John Michael McGrath is here to break down the key numbers and why they matter. Hello, sir. How are you?

[John Michael McGrath]: Good. How are you doing?

[Host]: Not too bad. You have been quite busy.

[John Michael McGrath]: Yes, since 9:30 this morning. You have been up close and personal with the budget.

[Host]: There we go. A 2026 budget. A plan to protect Ontario. Yes. Let's start with the basics here. What are the big headline numbers from this year's budget?

[John Michael McGrath]: So the biggest number coming out of this year's budget has to be the deficit. The government had been projecting a smaller deficit this year than they've ended up with. We are now looking at a $13.8 billion deficit for this year. That is not just larger than they were projecting. They were projecting like a $7 billion deficit, but it's also larger than last year's. So we have got some chatter here. You can see we're comparing the projections from last year's budget versus the projections from this year's budget. So the deficit was projected to shrink hopefully by next year. In last year's budget, they were projecting to be balanced by next year. They are now projecting a $6.1 billion deficit for next year. We might be balanced by the following year. That would be the 2028-29 fiscal year. If the government accomplishes that. This might sound kind of churlish, but it would be the first time that the PCs have presented a balanced budget since they won in 2018.

[Host]: All right. Some other big numbers that we should keep our eyes on.

[John Michael McGrath]: Right. So a few things here. Interest on debt is one of the big drivers of the deficit. The government says that they've accumulated a lot of deficits. Some of that was Covid related. Some of that has been the result of tax cuts and other spending priorities. But overwhelmingly, the biggest driver of new spending has been health care. So we have an aging population in Ontario. This is not a secret. We've known for decades that that was going to drive increases in health care spending. And to put it one way, that bill is coming due, just to give you some examples here, the spending on health care just in the last two years has increased by $10 billion. It is now. This year will be over $100 billion just in health care spending alone.

[Host]: And this is usually is the biggest expense.

[John Michael McGrath]: Yeah. Health care is always the biggest expense in the budget, but it has grown rapidly. I'm not the oldest member of the Queen's Park Press Gallery, but when I first started covering like the first budget I covered in 2014, all Ontario spending, the total government spending expenditure was, I believe, $1300 billion. Okay, so health care is now almost as much as the total budget was like 12 years ago. So obviously that's a big driver. The government also has a big capital spending plan. Obviously, the Premier's been quite proud and public about wanting to build bridges and roads and highways and transit, all of those things. But even a large chunk of that capital spending plan is also health care. It's hospitals, right. And long term care homes. So these are costs that any government would almost certainly any government would have to bear. Just as I say, we have an aging population. This is part of what that means. But it is one of the primary drivers of increased expenditures. By contrast, education spending is going up maybe 1 or 2 billion over the next several years. Post-Secondary education spending is actually projected to fall despite some of the commitments this government has made. So yeah, health care overwhelmingly the driver of more spending.

[Host]: All right. I want to know if there was any surprises, because in recent years, big elements of the budget, usually announced maybe a week in advance of the budget. Was there anything this year that was sort of kept under wraps that quite took you for a surprise?

[John Michael McGrath]: Well, so I guess one surprise, you know, journalists periodically we have like, you know, betting pools. I know that some of my colleagues in the press gallery were betting on what the title of the budget would be this year. And I just want to say they reused the title are the 2025 budget was also a plan to protect Ontario. The 2026 budget is a plan to protect Ontario. That's the first time I've seen that in 12 years that they just decided to reuse the title. But no. One of the biggest items that was not previously announced in the you know, they always spend like two weeks before the budget announcing some of their bigger items. The one that they did not announce previously was, and pardon me, I'm just going to confirm the title with my notes. It's the Protect Ontario Account Investment Fund. Right. Previously, the government had announced the Protect Ontario Fund, Protect Ontario account. That was a $5 billion fund to assist businesses and employers in response to Trump's tariffs. Only 1 billion of that 5 billion got used. So they're now announcing this investment fund that will use the remaining $4 billion as seed capital. And they want to try and encourage private capital to come in. And they're going to look around for more sort of future facing investment opportunities. They want to work on supply chain resilience. They want to try and find ways to invest in, in some industries that maybe haven't traditionally been part of Ontario's industrial makeup. You know, you could probably think of like AI and other more sort of advanced industries. They want to try and lure them here to Ontario. And that $4 billion will be the seed capital with which they will do that.

[Host]: One of the big announcements that happened yesterday was the expanded HST rebate for new home construction. That was yesterday morning in Mississauga. What's what's the government hoping with that?

[John Michael McGrath]: So they're hoping to resuscitate the province's housing numbers. They've been quite dismal. And unfortunately the numbers in the budget have been revised downward yet again. Just to give you a scale of the context here, the government's estimate is that this HST rebate, which is being expanded from one that was announced last year, they expect that to lead to the construction of 8000 new homes between now and 2031.

[Host]: Not a whole lot of homes.

[John Michael McGrath]: Not not a lot, not enough to get us out of the hole we're in. By contrast, just the estimates for the new housing starts for this year in this budget were revised downwards by 10,000 units, and a further 20,000 units were lost in downward revisions for next year and the year after that. So I write about this for our website, the housing sector. No, I will say fairness to the government, some developer groups are much more positive about this outlook. They welcome these changes. They say it could help the housing sector turn the corner. They may know better than me. I'm kind of pessimistic on it so far. People can read about that at the website, but we should also add that on the same day that the government did announce the budget, that's earlier today, the federal government did also announce $1.7 billion in new funding that appears to be aimed at helping municipalities get rid of development charges. This has been something that both the provincial and federal government have been very serious about, have been very serious about, pardon me, it's primarily an Ontario and B.C. problem. Most other provinces don't rely on development charges as much as we do here. And so some of that money will presumably be coming to Ontario, but we don't know too many details about that yet.

[Host]: All right, John Michael, we are going to have to leave it there. Appreciate your time on the program. Now you've got two articles on the website, Steve Scott, another article you will break break down the budget all on OnPolly tomorrow.

[John Michael McGrath]: Yes. And we'll have the Finance Minister Peter Bethlenfalvy on the podcast tomorrow.

[Host]: There we go, John. Michael, really appreciate it.

[John Michael McGrath]: Thank you so much.