2025 Provincial Budget

On May 15, 2025, the Government of Ontario released its 2025 Budget: A Plan to Protect Ontario. The following is a summary of highlights from the perspective of Ontario’s business community, organized according to the OCC’s four economic imperatives to drive inclusive, sustainable growth.

SUPPORTING QUALIFIED PEOPLE, DIVERSE TALENT

Investing in Ontario’s Workforce, Post-Secondary & Research Capacity

Budget 2025 focuses on supporting Ontario’s skilled trades workforce amid trade tensions and economic uncertainty, adding $1 billion to its Skills Development Fund. This investment will help train and reskill Ontario workers and job seekers, bringing total funding to $2.5 billion. In addition, $150 million has been added to create and expand training facilities, while $50 million has been allocated for the Better Jobs Ontario program to help job seekers transition to in-demand jobs, especially in trade-impacted sectors. The Province has also added $159.3 million to expand skilled trades programs, $75 million to create up to 2,600 new seats annually in construction-related post-secondary programs, and $20 million to mobilize new training and support centres for laid-off workers.

Budget 2025 announced an additional $10 million to strengthen academic programming so that small, northern and rural colleges and universities can provide students with competitive choices for local post-secondary education. In addition, $750 million will be added over five years to fund up to 20,500 STEM seats annually at publicly assisted colleges and universities; $56.8 million to train, educate, and increase enrolment for nursing spaces in post-secondary institutions; and $16.5 million for the Black Youth Action Plan in high-demand sectors. Budget 2025 allocates $207 million to the Ontario Research Fund and $65 million for Advanced Research Computing systems, aiming to keep Ontario globally competitive and equipped to meet the demands of digital and emerging technologies like AI.

OCC Analysis
Given evolving trade tensions, economic uncertainty, and changes to immigration policies that are expected to impact Ontario’s workforce, the OCC welcomes government investments that support high-risk sectors and their workforces. Funding to support the skilled trades, industries experiencing ongoing labour shortages, and laid-off workers will be crucial for bolstering Ontario’s capacity to respond to tariff impacts and workforce challenges.

While funding investments included in Budget 2025 will be critical to strengthening Ontario’s research and innovation ecosystem, the lack of broader support for the post-secondary education sector is deeply concerning, given its enormous impact on the province’s current and long-term competitiveness. The OCC continues to advocate for strategic investment in Ontario’s post-secondary education system to help build a strong, resilient and future-ready workforce.

CULTIVATING A COMPETITIVE BUSINESS AND TRADE ENVIRONMENT

Strategic Investments to Navigate an Evolving Trade Environment

Budget 2025 provides several supports designed to help businesses deal with U.S. tariffs. Building off $9 billion in cash flow supports through provincial tax deferrals and WSIB rate reductions, the Budget includes up to $5 billion through the Protecting Ontario Account fund to provide immediate liquidity relief and broader support programs for trade-affected businesses. In addition, $40 million in grants through the Trade-Impacted Communities Program will help local industries shift to domestic procurement, grow, and diversify their supply chains.

The Budget outlines steps to protect Ontario’s manufacturing capacity. The Ontario Made Manufacturing Investment Tax Credit has been temporarily expanded with an allocation of $1.3 billion over three years to include non-Canadian businesses with eligible investments in the province and enhanced for Canadian-based businesses. Notably, $85 million in investments have been extended through the Ontario Automotive Modernization Program and the Ontario Vehicle Innovation Network to support the auto sector. In addition, $50 million has been allocated over three years to create a new Ontario Together Trade Fund that enables manufacturers to retool, reshore their supply chains, and access new markets. These announcements augment steps taken by the Ontario government to unlock free trade and labour mobility across Canada.

OCC Analysis
With rising international protectionism and the threat of U.S. tariffs, targeted support for trade-affected businesses is vital as they navigate economic uncertainty. The OCC commends the government’s decision to provide provincial tax deferrals and WSIB rate reductions, coupled with the creation of the Protecting Ontario Account fund.

These strategic investments and business relief measures will provide reprieve for businesses as they explore risk mitigation, supply chain resilience, and look to access new markets.

Equally important, the government’s measures will support long-term competitiveness by incentivizing manufacturers to make and attract investments. Ontario is North America’s second-largest auto producer, exporting 85 per cent of its 1.2 million vehicles built in 2022, with over 100,000 workers, and 400+ companies driving innovation across the sector. The province’s manufacturing sector also employs over 776,000 people across 36,000 companies. That is why the OCC welcomes today’s additional investments in automotive and manufacturing tax credits and programs as meaningful steps towards bolstering high-priority sectors for long-term growth.

Attracting Investment and Enabling Business Growth

Budget 2025 allocates an additional $600 million to the Invest Ontario Fund to provide Invest Ontario with greater capacity to help businesses locate or expand in the province. To help Ontario’s early-stage businesses scale, $90 million in additional funding will be extended to Venture Ontario. This will support investments in national defence technologies, AI and cybersecurity, and life sciences and biomanufacturing.

Budget 2025 further includes investments to enable small businesses to grow, upskill and transition. This includes a $7.5 million investment in the Digitalization Competence Centre to help businesses adopt and implement digital technologies as well as $1.9 million over three years to establish business succession planning services through Ontario’s network of Small Business Enterprise Centres.

OCC Analysis
The OCC supports increased investments in the Invest Ontario Fund, and additional funding to Venture Ontario. As businesses continue to grapple with economic and trade uncertainty, Ontario must foster a predictable, competitive business environment to remain attractive to global investors.

According to the OCC’s report Broken Links, SMEs were found to have limited access to resources and skills when it comes to digital adoption. With over 450,000 SMEs operating in the province, the OCC is encouraged to see targeted investments in Ontario’s workers and businesses. These supports will strengthen businesses in all sectors to remain agile in a rapidly evolving global economic landscape.

Accelerating Clean & Affordable Energy

Budget 2025 launches a new round of the Hydrogen Innovation Fund, investing $30 million to unlock hydrogen’s potential to drive economic growth, create jobs, and position Ontario as a leader in the clean energy economy. The Fund will broaden eligibility criteria to include grid-focused initiatives, as well as applications across other sectors, such as transportation. These steps augment a $4.7 billion commitment to refurbish and expand hydroelectric generating stations and a competitive energy procurement open to all technologies, including natural gas, which continues to provide affordable and reliable energy to meet rising demand.

The Budget also includes an additional $10.9 billion over 12 years in energy efficiency programs, including the newly created Home Renovation Savings Program. These programs include rebates for upgrades such as new windows, doors, heat pumps, and smart thermostats.

OCC Analysis
A reliable, affordable, and sustainable energy system is vital to Ontario’s long-term competitiveness. The OCC welcomes the government’s investments in electricity generation, transmission, and storage, including nuclear expansion, asset refurbishment, and support for hydroelectric, hydrogen, and clean technologies such as small modular reactors and large-scale storage. These efforts are critical to meeting the province’s projected 75 per cent increase in electricity demand by 2050, while ensuring energy security, affordability, and a diversified energy mix, including through conventional sources, for businesses and communities.

The OCC urges continued focus on accelerating energy infrastructure and long-term energy planning, while addressing the talent gap. Expanding competitive procurement and efficiency programs will be key to managing demand and lowering system costs.

Unlocking Ontario’s Mining Potential

Budget 2025 invests in new funding to accelerate Ontario’s critical minerals processing capacity. This includes $500 million for the Critical Minerals Processing Fund, which is dedicated to providing strategic financial support for mining projects, and an additional $5 million over two years for the Critical Minerals Innovation Fund to encourage innovation and reduce reliance on foreign supply. The Budget further provides an additional $10 million to extend the Ontario Junior Exploration Program to help junior mining companies cover eligible costs for critical and precious mineral exploration and development.

Notably, Budget 2025 advances investments to enable greater economic opportunity for Indigenous Peoples. This includes an additional $2 billion delivered through the Indigenous Opportunities Financing Program (formerly the Aboriginal Loan Guarantee Program) to support Indigenous participation in critical minerals, resource development, and related infrastructure sectors. The Budget also dedicates $70 million through the Indigenous Participation Fund over four years to help build capacity for Indigenous communities and organizations to participate in regulatory processes for mineral exploration and mine development. Finally, the Ontario Government will invest $10 million over three years to create Resource Development Scholarships for First Nation Students interested in pursuing careers in resource development.

OCC Analysis
The Ontario Chamber welcomes investments that support critical mineral exploration and drive innovation across the sector, supporting the province’s aim to be a global mining leader. These measures can strengthen Ontario’s position in global supply chains, reducing reliance on foreign sources and unlocking the full economic potential of Ontario’s mining sector.  We are encouraged by the recent announcement of the One Project, One Process approach for major resource development projects, alongside investments to expand economic opportunities for Indigenous Peoples and take meaningful steps toward reconciliation.

To fully maximize the benefits of these investments, the OCC urges the government to ensure timely regulatory approvals, infrastructure development, and workforce readiness. Addressing regulatory overlap and streamlining the permitting process through a single, coordinated consultation process will reduce delays, enhance community engagement, and strengthen competitiveness.

Strengthening Ontario’s Tourism Sector

Budget 2025 announced $2 million in tourism planning and almost $25 million in capital funding over two years, to support the revitalization of the Nancy Island Historic Site at Wasaga Beach. This investment will support Ontario’s tourism sector by driving regional economic development and expanding local workforces.

OCC Analysis
Tourism and hospitality play a significant role in creating vibrant communities in which to work and live. The OCC’s State of the Tourism Industry report found that Ontario’s tourism industry contributed $36 billion to the province’s GDP in 2022. The OCC is encouraged to see investments in Ontario’s growing tourism sector, a key economic driver in local communities. The government should capitalize on current tourism spending trends to maximize their benefit on Ontario’s visitor economies by investing in impactful infrastructure projects.

INVESTING IN HEALTHY AND SUSTAINABLE COMMUNITIES

Expanding Life Sciences & Access to Primary Care

Budget 2025 includes an additional $15 million to renew the Life Sciences Innovation Fund for three years to address challenges in the venture capital sector. The program will provide early-stage funding to life sciences companies that are raising seed or pre-seed investment rounds. This investment will help support firms as they transform investments from conceptual stages to commercialization, strengthen Ontario’s life sciences advantage, boost competitiveness, and ensure timely access to life-saving care.

Building on the historic $2.1 billion investment as part of Ontario’s Primary Care Action Plan, including $300 million for new teaching clinics, the Budget provides $159.6 million to expand the Ontario Learn and Stay Grant. This expansion will help increase the number of Ontario-trained doctors that practice medicine in underserved and growing regions, covering 100 per cent of direct educational costs, improving care to patients across Ontario.

OCC Analysis
Ontario is home to more than 2,000 life sciences companies contributing $65.2 billion every year in GDP and supporting over 72,000 high-paying jobs. The OCC supports the government’s continued investments in life sciences innovation, collaborating with industry, researchers, and investors to accelerate opportunities in the sector. While the additional funding is welcome, as outlined in the OCC’s Power of the Purchase Order, the Ontario government must collaborate with Supply Ontario to fully implement a value-based procurement approach that includes lifecycle costs, innovation, economic development, supply chain resiliency, and other long-term outcomes.

Over 2.5 million Ontarians are without a family physician, a number projected to rise to 1 in 5 within two years. This growing shortage of health human resources, compounded by gaps in the talent pipeline, is placing significant strain on system capacity and jeopardizing timely access to care and patient outcomes. The OCC commends the government for focusing on sustainable recruitment and retention strategies to strengthen primary care and attract family physicians and allied health professionals to rural, remote, northern, and Indigenous communities.

BUILDING GROWTH-ENABLING INFRASTRUCTURE

Expanding Roadways, Building Homes & Advancing Transportation Corridors

Budget 2025 outlines expanded infrastructure investments across housing, transportation, and supply chains. Notably, it introduces up to $5 billion to the Building Ontario Fund to partner with institutional investors on priority projects in energy, affordable housing, long-term care, and transportation. Through the EV ChargeOn program, a further $92 million has been allotted to expand public EV charging stations, enhance infrastructure in underserved areas, and support a more accessible, affordable, and connected province-wide charging network.

Budget 2025 provides an additional $400 million through the Municipal Housing Infrastructure Program and the Housing-Enabling Water Systems Fund to expand housing-enabling infrastructure and respond to high demand in fast-growing municipalities. Invest Ontario will also be armed with $50 million over the next five years to grow modular construction and other innovative development approaches. Furthermore, municipalities will now be given the option to reduce the municipal property tax rate by up to 35 per cent for eligible affordable rental housing units. This will provide a new tool to incentivize affordable housing stock across Ontario.

Budget 2025 commits to rehabilitate and improve critical roads and bridges that connect to provincial highways and borders through a $15 million annual increase to the Connecting Links Program, supporting asset longevity and enabling continued local development. The Ontario Shortline Railway Investment Tax Credit provides $23 million over three years as a 50 per cent refundable corporate income tax credit to qualifying shortline railways to support track maintenance and rehabilitation. The new Ontario Shipbuilding Grant Program will receive over $200 million to strengthen the province’s marine sector through grants for infrastructure improvements, skills training, and equipment upgrades.

Finally, the Ontario government is investing $11.9 million in 2025-26 to advance the Matawa Broadband project, extending fiber-optic connectivity to five remote First Nations communities in the Ring of Fire. To support economic development and access in the north, the government will invest $6 million in 2025-26 to expand Forest Access Roads, and an additional $2.4 million over three years to continue implementing the Forest Sector Strategy.

OCC Analysis:
Budget 2025 affirms the critical roles that building and modernizing critical infrastructure play in driving economic growth, creating jobs, and ensuring long-term resilience. Strategic investments in growth-enabling infrastructure like roadways, railways, marine transportation, transit, and broadband are vital for reducing congestion, strengthening supply chains, enhancing connectivity, improving productivity, and building climate-resilience.

While the Ontario Chamber is encouraged by the recent proposed legislative steps the government is taking to accelerate infrastructure project delivery, we recommend additional measures to further streamline infrastructure development and approvals, coupled with effective land use planning and natural infrastructure asset management. Aligning new investments with forward-looking policy tools and integrated resource-planning will be essential to ensuring public dollars deliver lasting social, environmental, and economic returns.

ONTARIO’S FISCAL OUTLOOK

Budget 2025 reveals $232.5 billion in spending at historic levels, reflecting the unprecedented action needed to navigate trade-related economic uncertainty. Its investments aim to drive business competitiveness, economic growth, and resilience, while mitigating the impacts of these challenges on households, businesses, and trade-exposed sectors. That being said, this means there is less room for Ontario to tackle other urgent threats to our competitiveness, such as the crisis in the post-secondary sector.

Growing uncertainty and a slowing economy are contributing to a worsening debt burden for Ontario, with the deficit for 2025-26 projected at $14.6 billion. This more than doubles the projected $6 billion deficit for 2024-25. A minor surplus of $0.2 billion is not expected until 2027-28. Ontario’s expected net debt-to-GDP ratio is forecasted to rise from 36.3 per cent in 2024-25 to 37.9 per cent in 2025-26, reflecting the additional borrowing required to finance the province’s support measures. This measure indicates the government’s debt burden in relation to its capacity to repay the debt. The ratio was previously expected to peak at 39.2 per cent in 2024-25 and then decline; however, current projections indicate a continued upward trend into 2026-27.

Ontario’s real GDP growth is projected to slow to 0.8 per cent in 2025, down from 1.5 per cent in 2024, coupled with an increase in the unemployment rate of 7.6 per cent in 2025 (up from the previously forecasted 6.6 per cent).

Though inflation has continued to ease, sitting at 2.4 per cent and nearing the Bank of Canada’s 2 per cent target, this has had a dual impact on Ontario’s fiscal position. Declining inflation and interest rates have eased borrowing costs, helping to contain the growth of debt servicing expenses. On the other hand, the province is no longer benefiting from the same revenue windfalls seen during recent periods of high inflation, such as sales and income tax gains.

As a result, the government is now relying more heavily on greater borrowing to finance new spending commitments. While current borrowing conditions are more favourable than in previous years, the sustainability of this approach will depend on Ontario’s ability to see returns on its investments, realize stronger economic growth, and stabilize its debt levels over the medium term.

This year’s budget reflects a proactive approach to navigating economic challenges posed by international trade disputes, declining population growth, and an economic slowdown. While the increased deficit and debt levels are notable, the government’s targeted investments aim to support affected industries, businesses, and households, and lay the groundwork for future economic resilience and productivity growth.

We are encouraged to see the creation of the Protecting Ontario Account fund as an emergency measure aimed at protecting businesses and workers from tariff-related disruptions.

At the same time, given the province’s increasingly constrained fiscal position, we would encourage additional measures and safeguards designed to accommodate unanticipated economic and budgetary risks, including slower-than-projected economic growth. This will be especially important to help ensure unforeseen shocks do not detract from or come at the expense of vital growth-enabling programs and investments.

For this reason, the Ontario Chamber recommends a comprehensive fiscal review to ensure Ontario’s tax and spending framework support long-term economic growth.

Continued close monitoring of economic indicators and prudent fiscal management, particularly considering tax reduction measures, will be essential to ensure long-term fiscal sustainability.

WHAT’S MISSING

Budget 2025 lacked new measures around arts, culture, and creative industries, procurement, land-use planning, broadband, agriculture and natural infrastructure, and digital infrastructure, and was light on investments to support climate-resilience or the critical needs of the post-secondary education sector – both urgent long-term challenges that will influence Ontario’s competitiveness, growth and resilience.

The government has yet to develop an Ontario culture sector strategy that prioritizes and ensures the sector’s inclusion in economic action plans. The OCC continues to encourage the Province to engage and collaborate with industry, academia, artists, equity-deserving and Indigenous communities, and other relevant stakeholders to strengthen provincial creative and cultural supply chains (See: Ontario’s Arts, Culture and the Creative Industries: Strengthening Competitiveness and Communities).

As referenced earlier in this brief, Ontario must adopt value-based approaches as part of its procurement strategy, most notably in healthcare, to deliver long-term value for Ontarians.

Budget 2025 did not include new measures to strengthen Ontario’s land-use planning framework, which is critical for business competitiveness, sustainable growth, housing affordability, and efficient infrastructure delivery. Additional clarity, consultation, and coordination are needed to reduce delays, protect employment lands, and align economic, environmental, and community priorities.

The Budget also lacked new investments and measures in digital and broadband infrastructure, particularly for rural, remote, and Indigenous communities. Reliable, high-speed internet is essential for education, commerce, health care, and agriculture. The OCC continues to call for a clear broadband implementation strategy to close the digital divide, updated targets, and stronger accountability.

While Ontario’s expanded Risk Management Program (RMP) helps farmers better compete globally, Budget 2025 did not include broader measures to strengthen Ontario’s agri-food sector or invest in natural infrastructure. The government should advance an agricultural economic strategy and invest in assets like wetlands, forests, and green spaces to improve climate resilience and biodiversity.

Although  Budget 2025 makes investments into the energy sector, the Ontario Chamber looks forward to a finalized Integrated Energy Plan that incorporates the Electrification and Energy Transition Panel’s insights and outlines a clear roadmap for electricity and low-carbon fuel needs, supporting long-term planning.

Budget 2025 failed to reveal new investments that advance climate resilience and prepare communities for the increasing impacts of extreme weather events. The Budget lacks critical and targeted funding for climate adaptation planning, risk mitigation infrastructure, and community preparedness. The OCC encourages the Ontario government to develop and implement a comprehensive climate resilience strategy that includes investments in natural infrastructure, updated building standards, and support for municipal adaptation projects to safeguard public health, critical infrastructure, and economic stability.

Finally, the Ontario Chamber continues to call for the government to fully fund post-secondary enrolment expansion and implement recommendations from the Blue-Ribbon Panel Report. This is essential to attract top global research talent from abroad, which will generate the knowledge and intellectual property for Ontario’s future; it is also essential to keeping young Ontario talent at home in their communities.

For more details, refer to the Ontario Chamber of Commerce’s 2025 provincial budget submission.