Steve Paikin: Welcome everyone to the OnPy podcast. I'm Steve Pen...

John Michael McGrath: ...and I'm John Michael McGrath.

Steve Paikin: Today on the pod, the Ontario budget is out. We'll talk to Finance Minister Peter Bethlin about some of the highlights, the letdowns, and things that piqu our interest. Then we're going to zoom out and take a bit of a broader look at the budget, what's in there, what's missing, and what the next year might look like.

John Michael McGrath: We might be taking a bit of a slight break from our threeisssue format today, but we hope to offer analysis about how the budget might shape the lives of the people of Ontario. And in your column, my column, I'm going to focus on the province's promise to give eligible homeowners an HST break.

Steve Paikin: And I am shining a spotlight on a subject that I've asked the treasurer about, oh, maybe 200 times over the last six straight years. Nothing has changed yet, so I'm still going to pester him about it. Stick around and find out what it is. It's Friday, March 27th, 2026. So, let's get to it.

John Michael McGrath: Steve, a little postbudget day sugar to start with there. Can we call it that day after budget? Now I am wondering whether or not the choice of your shirt today is significant and are you trying to say something about the budget or the budgetary process or [laughter] something by having a bunch of dinosaurs on your shirt?

Steve Paikin: Well, okay. So, I'm wearing the Jurassic Park t-shirt. Uh, this budget, I'm assum assuming was not 65 million years in the making as the original tagline for the movie was. Uh, but Jurassic Park of course spawned a sequel and now a whole franchise of films. And um it turns out the 2025 budget which was called A Plan to Protect Ontario has also spawned a sequel because the 2026 budget is also called a plan to protect Ontario.

John Michael McGrath: What do you know?

Steve Paikin: And uh this is the first time I've seen this in my 12 years of covering Ontario budgets. They always give the budget a title, but they tend to mix it up. And the the point is to give the the government's policies for the coming year a bit of a theme, right? You're going to tie together a bunch of announcements. And traditionally, they change up the theme. But I guess this year they have decided they're um they're just going to play the hits again.

John Michael McGrath: Well, maybe [clears throat] unlike every other sequel, which is never as good as the original, they think that this year's sequel is like Godfather 2, which everybody thinks was better than Godfather 1. Not me, but everybody else does. Uh yeah, I uh I I think if you're going to try that gamble, you really got to be sure you got Godfather 2 on your hands. [laughter]

Steve Paikin: Very good. Well, uh, consistent, I would say, with the theme of having a finance minister on the show this week, we've got Peter Bethl Falvi coming up. I thought I would wear a former finance minister's t-shirt this week as well, cuz that just sort of seems symmetrical, right? And I've got, shall I stand up here? There we go. It says, "We believe in EES." These are the t-shirts that they gave out at the 2002 Ontario Progressive Conservative Leadership Convention, which was 24 years ago this week. Ernie Ees was the finance minister at the time. He was running to replace Mike Harris, who was the premier at the time and had stepped down the previous, well, I guess it was Thanksgiving. He stepped down. Uh Ernie Eesh brought in a lot of budgets. He brought in six budgets for the common sense revolution conservatives. Uh the first one was the most dramatic. He cut provincial income taxes by 30%. He also cut welfare rates by 22%.

John Michael McGrath: Yes.

Steve Paikin: On the second ballot. So, it was not exactly a barn burner of a convention. Everybody pretty much Ernes was the front runner going in. Uh, he won the leadership on the second ballot. It was not one of the more dramatic leadership conventions. And he then became Ontario's 23rd premier. And this was the t-shirt they gave out at the convention. And I don't know if we can get a shot from behind or Sheldon, do I have to turn around because there's a little something. I got to turn around. Okay, let's see if I can do this. Can you see that? Yes. So, we've got Ernie, Ernie, Ernie, Ernie going down the back of the shirt. Lots of Ernie, Ernie, Ernie as people chanted his name at the convention. And Mr. Ees will tell you, he picked exactly the wrong time to become the 23rd premier of Ontario because we had the massive hydro blackout on the northeastern seabboard. We had a case of mad cow disease. We had SARS in which 44 people in Toronto lost their lives. Yes. So it was a really difficult time to take over. Not to mention that he was coming in after eight years of very dramatic common sense revolution under Mike Harris. So tough time.

John Michael McGrath: The Ontario government brought down its budget yesterday. They are still calling it, as JMM just indicated, a plan to protect Ontario. Although they also tell us that Ontario did pretty well protecting itself from President Trump's tariffs and other trade irritants. Let's go through some of the highlights here. JMM, where do we want to begin?

John Michael McGrath: Well, we're going to dig into some of the other details later, but I think the topline number to know about for uh the interview with the finance minister coming up is that the province has a 13.8 billion deficit. Uh that is not just higher than what the government was projecting in last year's uh budget for this year. It is also higher than last year's budget deficit. Uh the government is also uh pushing back by one year their target for when they will balance the budget. uh they were hoping to have a a razor thin surplus next year. That will now be uh two years out from now. Uh and uh yeah, as you can see on uh the chart if you're watching at home, uh you know, basically [clears throat] I think it's fair to say that uh the the projections for this year and for the next two years uh have gotten worse relative to just what was projected uh last year.

Steve Paikin: ...you know, a bunch of questions about that in terms of uh you know, how uh the government has responded uh to uh Trump's tariffs since the election, which was of course justified on the threat of those tariffs and how we would respond to them. Uh a few other notable things uh was announced the uh day before the budget was presented, the HST exemption for new homes sold in Ontario. The previous HST rebate announced by the province and the federal government had been targeted at first-time home buyers. This will now be more generally available. Uh is going to cost the province about $1.4 billion and will be eligible for homes. Uh the the full rebate will be eligible for homes up to 1.5 million.

John Michael McGrath: Can I say a fast word about that? It's so funny. nowadays. Back when I was your age, no, back when I was actually half your age, when I first started getting into lockups, I guess this was probably my, I don't know, 39th or 40th lockup or something like that, everybody had to be very, very concerned about not leaking anything out of the budget because they didn't want it to affect the stock market, which is why they don't let you report on it until after 4:00 when the markets close. Governments are leaking their own budgets all the time. Now, this is the biggest, you know, ticket item in in this budget, the HST exemption on the new home sales, and they announced it the day before the budget. So, throw the rules out there. There are no more rules in...

Steve Paikin: Yeah. I mean, there's a whole debate to be had about how these budgets are communicated and and whether some of the old rules make any sense anymore. Um, yeah. The other item, and we're going to talk about this a bit more, but, uh, there's a $4 billion Protect Ontario account investment fund. Uh this idea is actually the government is going to take $4 billion that they actually had announced as $5 billion last year. Uh they only ever spent $1 billion of it. Uh so now they're going to take the the remaining 4 billion and move it forward into a fund that is going to uh they hope uh bring in uh lots of private investment as well to match that. And they are going to go looking for more uh future oriented industries that they can uh grow here in Ontario. And I'm sure the finance minister will have some things to say about that.

Steve Paikin: Well, it's less about what was on my radar and more about who was on my radar. And the who is finance minister Peter Bethlin Falvi, who joins us now from the Frost Building at Queens Park. And treasurer, it's good to have you back on TVO. How are we feeling on budget day plus one?

Peter Bethlenfalvy: Feeling great and it's good to be with you and John Michael and yourself again.

John Michael McGrath: Uh Minister, I think one of the biggest items from this budget is that the uh a balanced budget uh projection has been kicked back another year. Uh this government has been promising to balance the budget since it was first elected. Uh why hasn't the government been able to meet that goal? uh so far

Peter Bethlenfalvy: events dear John Michael events I mean we uh we've come out of a pandemic uh big inflation uh you know the tariff uh situation and now uh conflict in in the Middle East. So you know this is uh this is the world that we're in right now. We have to adapt to that world. Uh we're committed to balancing. That's that's been our goal all along and we'll continue to do that. I would say that uh I think we're the only province that is balancing in two years. So uh and we're committed to doing that. Um but then again, governments around the world, their deficits are increasing. Ours also is increasing because our population grew by 2 million people over the last eight years. Twothirds of that since the beginning of COVID. So there's that's put a lot of pressure on the expenditure side. And I'm not going to cut spending in healthcare, education, or social services. That's twothirds of our budget right there. We're going to continue to make that investment.

Steve Paikin: Your government of course prides itself on never having raised a tax since you took over at Queens Park in 2018. But I I am curious and so I want to ask you this question. Are there any circumstances under which you think it's appropriate or useful to raise taxes?

Peter Bethlenfalvy: Can't think of one. And uh you know uh we followed up yesterday with tax cuts for small businesses. For example, Steve, 375,000 business businesses will benefit from a 30% tax cutth for small businesses. Uh I think this will help economic growth, uh economic prosperity, bring good jobs, and they're the economic engine. So, uh we're more leaning the other way, making life more affordable, not just for businesses, but for families and individuals. And by the way, a lot of small businesses are owned by uh small families and indivi individuals who are trying to make a living.

John Michael McGrath: One of the other big announcements in this budget was a $4 billion Protect Ontario account investment fund. We've seen agencies kind of like this uh elsewhere and I'm thinking in particular of the Federal Infrastructure Bank. Um but it had kind of disappointing results. Why do you think this is going to work in Ontario uh where it hasn't worked as well in other jurisdictions?

Peter Bethlenfalvy: Well, I wish you had compared it to the building Ontario fund which is our infrastructure bank that we just launched I think a year and a half ago. It's set up in the same way and its goal is to build more infrastructure that wouldn't otherwise get built and build it faster on an armslength basis with governance and a a chair and a board in place to manage uh not only the taxpayers money but also bring in other investors to get those deals done. Since the inception, they've invested in like the Rakai Center in in the distillery district. You know, Peter Rakai told me that long-term care facility he's been trying to build for 13 years. Our Building Ontario fund helped them get that past the finish line. Toronto Metropolitan University uh we helped them do through that agency building Ontario fund. Uh 1,400 student housing uh spaces, more than doubling what they have. And of course, our investment in small modular reactors that was all done through the building Ontario fund set it up. We set that up for infrastructure. We're now setting up uh the protect Ontario investment fund.

Steve Paikin: Treasurer, my next question I know you would be incredibly disappointed with me if I didn't ask because I've only asked it of you about 247 times uh over the last six years. Um so what the heck? For old times sake, let's go around this Mary go around one more time. Your government is subsidizing electricity bills for the people of Ontario to the tune of almost $7 billion a year. That represents more than half the deficit at the moment. It is not means tested, meaning that you and I both get our hydro bills subsidized by the taxpayers. You send me 46 bucks a month that I don't need or want, and I'd frankly rather you spent it on something that, you know, would make more sense, like maybe other people's electricity bills who were lower income. Why are we still doing things this way when almost every other observer points out this is the wrong way to do things?

Peter Bethlenfalvy: Well, thank you for bringing it up the sixth time in a [laughter] row. And you look, I'm going to give you the sixth answer in a row. Um, you know, the $2 billion that uh we use the Ontario electricity rebate is to help uh uh individuals help small businesses help farms. So, it's an affordability measure. There's another three billion that goes to uh companies and in industrial and commercial uh buildings that's helping them with the electricity prices. uh it's a legacy of previous governments that the bills are a lot higher. There's a lot of uh legacy costs to the wind and solar and the overpayment for those infrastructure. So that has to be borne uh by uh the taxpayers and that's what this is uh providing some relief against those cost increases.

Steve Paikin: I was interested to hear Mr. Betham Falby say there are no circumstances at all that he can conceive of raising taxes. As I say, Mr. Ees thought the same thing until after 911 when we used to have legislation in this province saying if you want to increase taxes, you got to have a referendum go to the people and they need to give you permission. ... Well, guess what? After 9/11 and Mr. Reeves um I guess changed his mind at that point because he needed more revenue and they decided without having a referendum.

John Michael McGrath: Well, and you know, so we've already discussed that. I think it's fair to say that the uh budget really outlines some deteriorating uh fiscal indicators uh that I'm I'm sure the finance minister is not happy about. Um but uh strictly speaking, I don't think you would describe the problems in this budget as a revenue uh problem. Right? The the revenues went up last year. It's just the spending went up more and the deficit grew. um you know uh debt grew, the interest on debt grew. ... those things are being driven primarily by spending priorities and tax cuts. Uh those are political choices.

Steve Paikin: Yeah. And you know, if this budget were presented by a a liberal finance minister or a new Democrat finance minister, I think we can fairly guess what Peter Bethinfaly, were he sitting in the opposition benches, would say about it. And and he wouldn't be kind, right? He would be talking about a a government that had lost control of spending that was uh you know pursuing uh uh all the wrong priorities.

John Michael McGrath: you know what else is weird? We're drinking less. Did you notice this about I mean look at there's thousands of numbers in the budget. We're not going to talk about all of them but but some of them do capture your attention. And when I saw that revenues for the LCBO are down I don't know what like 200 million bucks or something year-over-year. ... The government is making less revenue from those alcohol sales than it would have under the classic model. ... They are now simplifying a lot of the tax structure. Um but I I think the effect is going to be to lower revenues from alcohol in the future.

John Michael McGrath: Uh so I'm going to uh talk a little bit more about this HST credit. ... The government projects that it will induce 8,000 new homes to be built. That's not 8,000 new homes this year. That's 8,000 new homes between now and 2031. So anybody hoping that this was going to rescue Ontario's housing sector, I would say um uh curb your enthusiasm. [laughter] ... I think the government keeps acting like we just have this small problem to fix and the housing sector will come roaring back to life. uh and I think the problems are more fundamental and require uh more uh uh aggressive solutions.

Steve Paikin: Well as we hinted in uh our interview with the Minister of Finance I did my column on a subject that has just simply confounded me for the last many many years and that is the notion that we are spending as taxpayers $7 billion a year just about to subsidize people's electricity bills. ... Do I want the finance minister who makes six figures a year, Doug Ford who makes six figures a year? Do I want all people who are higher income and may very well live in bigger homes and as a result use even more electricity? Do I want them to have their electricity bills subsidized by the taxpayers? I don't see how that makes sense.

John Michael McGrath: And that is the OnP podcast for this Friday, March 27th, 2026, the day after the Ontario budget...