TORONTO — Ontario’s 2026 budget reveals a government trying to do two things at once: spend aggressively to reshape the economy while insisting it can still balance the books within a few years.The $244-billion plan, tabled by Finance Minister Peter Bethlenfalvy, projects a $12.3-billion deficit this year, rising to $13.8 billion in 2026–27 before returning to surplus by 2028–29.At the same time, the province is committing to more than $210 billion in infrastructure spending over the next decade — the largest capital plan in its history.“We are delivering on our plan to protect Ontario and build the most competitive, resilient and self-reliant economy in the G7,” Bethlenfalvy wrote in the budget’s foreword.That dual approach — big spending alongside a promised return to balance — defines the budget’s central tension..The government is placing one of its largest bets on nuclear energy, elevating it from a utility issue to a cornerstone of economic policy. Ontario is moving ahead with new large-scale nuclear generation and small modular reactors, including expansion at the Darlington site, while positioning itself as a global leader in nuclear development.The economic claims are sweeping. The province says its nuclear plan could create 150,000 jobs and contribute more than $800 billion to Canada’s economy over time.Those figures underscore how central nuclear has become to the province’s long-term strategy — not just as a source of electricity, but as an industrial policy meant to drive jobs, exports and investment.Artificial intelligence plays a similar role in the narrative, though with a notable gap between ambition and spending. The budget cites projections that AI could add $122 billion to Ontario’s GDP between 2025 and 2035 and generate thousands of jobs annually.“Artificial intelligence represents a significant economic opportunity for Ontario,” the document states, framing the technology as a driver of productivity and growth.But the direct investments tied to that vision are relatively modest — including a $107-million renewal of a broader technology program that also covers sectors beyond AI.That imbalance suggests AI is being used more as a signal of future growth than as a major immediate spending priority.The same pattern appears in the budget’s treatment of defence and advanced manufacturing, where AI, critical minerals and industrial capacity are increasingly linked. Ontario is positioning itself as a hub for defence production and dual-use technologies, blending economic development with national security priorities in a way that has not typically defined provincial budgets.Meanwhile, the government is cutting taxes..The plan includes a more than 30% reduction in the small business corporate income tax rate, alongside accelerated write-offs for capital investments that will cost billions in foregone revenue.Those measures are intended to spur investment and growth, but they also deepen the contradiction at the heart of the budget: lowering revenue while deficits persist.The province’s fiscal outlook depends heavily on steady economic growth and a relatively smooth global environment — assumptions the budget itself warns may not hold. Trade tensions, tariffs and broader geopolitical instability are flagged as key risks, along with uncertainty surrounding emerging technologies like AI.“The year ahead could bring the potential of new challenges,” Bethlenfalvy wrote, acknowledging the fragility of the outlook.In that context, the plan to return to surplus within three years appears less certain than the headline suggests.There are also quieter signals in what the budget does not emphasize. Despite its focus on science, innovation and technology, there is no major funding announcement for the Ontario Science Centre — a notable absence given the public attention surrounding its future.Taken together, the budget outlines a government attempting to reposition Ontario’s economy around energy, infrastructure and emerging technologies, while maintaining political commitments to tax relief and fiscal restraint.It is a strategy built on large, long-term bets — on nuclear power, on artificial intelligence, and on sustained economic growth — all while running deficits in the near term.Whether those bets pay off will determine not just the province’s fiscal path, but the credibility of its broader economic vision.
