The Ford Government presented its 2025 budget, entitled “A Plan to Protect Ontario,” last week. I don’t have the capacity to analyze the entire document. Rather, I will focus on three aspects of the budget that illustrate my point that it doesn’t “add up.” I don’t mean that in an arithmetical sense, but rather that its forecasts are implausible and that actions based on these forecasts will end badly. I’m referring to the proposed tunnel under Highway 401, the rebate of  Workplace Safety and Insurance Board (WSIB) premiums to employers, and the spending forecasts for the current (2025-26) and two subsequent (2026-2027, 2027-2028) fiscal years.

The Fantasy Tunnel

To begin with terminology, the 2025 budget consistently uses the term gridlock, which means traffic is so congested that it doesn’t move, to refer to congestion, which means that traffic moves more slowly than on an open road. Terminology matters: gridlock is alarmist, leading to drastic proposals.

The Ford Government’s approach to traffic is to lower the cost of driving wherever possible, to build lots of roads, and to refuse to consider any forms of road pricing. This budget reduces the cost of driving by making the gasoline tax cut of 5.7 cents per litre permanent and vowing to keep the remaining tax on gasoline at 9 cents per litre indefinitely. This is on top of the federal government’s recent termination of the consumer carbon tax, which the Ford Government had been urging since it was first elected. (Remember the gas pump stickers?). It has removed tolls on the provincially owned portion of Highway 407 (from Pickering to Clarington). And it is removing bicycle lanes from major downtown Toronto streets.

The budget proudly points out the Government, through legislation, has banned tolls on public highways and has prevented municipalities from implementing road tolls, including tolls intended to reduce congestion. It is even preventing the City of Toronto from implementing a personal vehicle tax.

It should come as no surprise that when the cost of something is reduced people want more of it. On the one hand, the Ford Government is stimulating the demand for road travel; on the other, it is building more roads, Highway 413 and the Bradford Bypass being the highest profile.

The Ford Government doesn’t realize, or doesn’t want to realize, that traffic congestion represents an economic externality. The cost of an additional driver on a busy highway – the marginal cost to society in terms of delay to many other drivers – is higher than the average cost of using the highway. The solution that is being introduced in an increasing number of major cities, most recently New York City, is road pricing, which requires drivers to pay something closer to the marginal cost they impose on other drivers. For the Ford Government, that is anathema.

The most congested stretch of highway in Ontario is Highway 401 through Toronto. The Ford Government could immediately improve the situation on Highway 401 by subsidizing tolls on Highway 407 for commercial vehicles or it could even buy out the remaining 74 years on the franchisee’s lease and make Highway 407 a freeway. Instead, the Ford Government’s solution is a different kind of road. This brings us to the announcement in the budget of an “RFP to explore the feasibility of building a new driver and transit tunnel expressway under Highway 401 from west of Mississauga to east of Scarborough.” A tunnel 50 kilometers long has major logistic issues, as I discussed in a post several months ago: accumulated auto exhaust, water pooling, steep entrance and exit ramps, and chaotic accidents.

Going beyond logistical issues, the highway part of the tunnel would likely cost $100 billion, without even including a transit component. In comparison, the 2025 budget tells us that Ontario’s 10-year capital budget for roads is $30 billion, for transit is $60 billion, and in total is $200 billion. Assuming the tunnel were built over 10 years, it would more than triple the capital budget for roads and increase the province’s entire capital budget by more than 50 percent. I find it hard to believe the global capital markets would view such an enormous and logistically unproven project with equanimity. They would likely downgrade Ontario’s credit rating, which would increase the cost Ontario taxpayers would pay for government borrowing. Citizens groups will be fiercely fighting the tunnel – I’m all in – but I’m optimistic that the capital markets will kill it.

The WSIB Rebate

The Ford Government runs an insurance company, known as the WSIB. Employers pay premiums, based on their industry and their safety record. Claims for workplace injuries are paid out of the compensation fund the WSIB has built up from the premiums. To “protect against economic uncertainty and the impact of U.S. tariffs,” the Ford Government has decided to cut premiums and to redistribute $ 4 billion in what it calls “surplus funds” to safe employers. The Ford Government is raiding the WSIB’s compensation fund. But workers will continue to have accidents at the same rate as in the past. If there is no money in the compensation fund, claims will be paid from general tax revenue. This will not be sustainable for very long. In the future, look for premiums to return to sustainable levels.

Ministry Expense Predictions

In its 2024 budget, the Ford Government predicted total expenses for the 2024-25 fiscal year of $217 billion. (The fiscal year runs from April 1 to March 31.) Actual expenses for the 2024-25 fiscal year totalled $227 billion, or $10 billion higher. The 2025 budget explains the overrun as due to higher compensation costs in the health and education sectors, growing demand for health services, higher-than-forecasted spending in the college sector, increased spending on asylum seekers arriving in Ontario, and legal settlement claims for indigenous land claims. To quote the original SNL character Roseanne Roseannadanna, “it’s always something.” In fact, the $10 billion overrun would have been $13 billion, except for the presence of a $3 billion contingency fund.

The new budget projects total spending in the 2025-26 fiscal year of $232 billion, $ 5 billion (2.2 %), higher than in fiscal 2024-25. The 2026-27 and 2027-28 fiscal year projected budgets are essentially flat, with a total of $235.7 in the latter fiscal year, representing increases of less than 1 % in both fiscal years. Breaking it down by sectors, health care spending increases by 2.7 % from 2025-26 to 2027-28, while all the other sectors (education, postsecondary education, social services, justice) are flat.

Judging by the $10 billion overrun in 2024-25, the forecasts for the 2025-26 fiscal year and especially the following two fiscal years look very implausible. Some commentators have called this an austerity budget. In my view, the Ford Government is projecting essentially flat spending for the next three fiscal years so that it can predict a balanced budget in 2027-28. My prediction is that “it’s always something” will continue happening in future years, and the Ford Government’s actual spending will continue to be higher than its projections. My prediction is that the Ford Government will continue to run deficits for this mandate.

The Problem is Dishonesty

My overall view is that the problem with the Ford Government’s budget is intellectual dishonesty. It wants to support drivers in a myriad of ways, to keep costs down for consumers, and to protect the economy from the effects of a trade war. And it always wants to preserve the appearance of being fiscally prudent. That’s why its numbers don’t add up.