TORONTO — The federal government’s 2026 budget, tabled Thursday night, projects a $62.3-billion deficit and adds roughly $142 billion in new measures over five years — most of it spent from an oil-price windfall that Ottawa chose not to bank.For Ontario, the document offers limited new help for the steel, auto and manufacturing sectors already absorbing U.S. tariffs, while locking in higher federal debt charges that will eventually hit provincial taxpayers through reduced transfers or higher interest costs.Finance Minister François-Philippe Champagne’s budget, titled Masters of Our Destiny, confirms the deficit is $3 billion lower than the spring forecast, driven largely by stronger oil revenues. The government then directed almost all of the extra money - about 96 cents of every additional dollar - into new spending and tax measures.Among the larger items are a $36.1-billion “productivity mega deduction” that lets businesses immediately write off certain capital investments, an $11.2-billion plan to address homelessness over four years, and $11.3 billion in tariff supports. Ontario’s steel and auto sectors were already covered by a previously announced $8.7-billion joint Canada-Ontario action plan; the new budget does not add a major new envelope for those industries..WATCH: Ontario projects $16.9B deficit as balance date is delayed again.Ontario’s own fall economic statement last week projected a $16.9-billion provincial deficit for 2026-27, up from the $13.8-billion estimate in the spring budget. The province attributed the deterioration largely to tariff impacts on manufacturing and weaker growth. Federal transfers rose modestly in the provincial update, but Ontario officials have continued to press Ottawa for a permanent 5% floor on the Canada Health Transfer beyond 2027-28 and for longer-term funding on mental health and home care.The federal budget extends some existing health-related agreements and includes $1.2 billion in 2027-28 for mental health and home and community care, but it does not lock in the permanent growth rate Ontario has requested. Child-care funding already committed to Ontario is confirmed, yet no new multi-year deal is outlined.Public debt charges are projected to climb from $60.2 billion this year to $85.5 billion by 2030-31. That rising interest bill will compete with transfers to the provinces at a time when Ontario is still years away from balancing its own books.
