The Liberals will protect investments in jobs and growth ahead of meeting "short-term targets" to balance the books, Finance Minister Charles Sousa announced in the annual fall economic statement.
"Stronger economic growth and new jobs are the surest, fairest path to higher revenues and a balanced budget," he said.
The finance minister also said the slow and uncertain recovery from the global recession has led to $5 billion less in projected provincial revenues since 2010.
The Canadian Taxpayers' Federation said the lack of cuts and the continued spending means Ontario is "abandoning any hope" of a balanced budget.
"Stimulus spending hasn't worked in the past," said CTF Ontario Director Candice Malcolm. "In Ontario, it simply slowed our recovery and left us with a mountain of debt to be paid off by future taxpayers."
The fall economic update put the province's debt figure at a whopping $272 billion, more than double what it was when the Liberals were first elected in 2003.
The opposition parties expressed their disappointment in the lack of a real jobs plan in the economic statement, and said they doubted the Liberals can balance the books within four years because economic growth is weak and getting weaker.
"You carved out this new thing that you're saying 'we're going to meet our budget targets and be out of deficit by 2017-18' and then immediately follow that by saying if not you've got a new path," complained NDP finance critic Michael Prue. "Well you're not going to make it. It is simply not possible."
The Progressive Conservatives said the Bank of Canada's economic forecasts show there won't be enough growth for the Liberals to balance the books on schedule.
"You can't spend your way out of deficit and you can't tax your way to prosperity," said Opposition Leader Tim Hudak. "The Liberal policies have put us deep in debt and cost a lot of jobs while driving up hydro bills, and I don’t see how six more months of the exact same policies are going to change anything."
Earlier Thursday, Premier Kathleen Wynne previewed Sousa's statement in a speech to a Toronto conference on public-private partnerships, insisting the Liberals were not backing off their goal to eliminate the deficit within four years.
"It's not that we are saying we're abandoning that and we're going to now just spend and invest," she said. "We're the leanest government in the country. We need to continue to make sure that we control spending in a rational way, but I am determined that we are not going to cut and slash the services that people need."
The government announced it intends to invest heavily in infrastructure projects, which Wynne called a centre of the Liberals' economic growth plan. Eleven major projects were given the green light, including the extension of Highway 427 in York Region and major improvements at GO Transit.
Both the Tories and NDP say the Liberals' emphasis on infrastructure spending will benefit well-connected big companies that donate heavily to the governing party.
"The only people seeing concrete commitments are the lobbyists working the back rooms for public private partnerships, and banks and insurance companies who stand to profit nicely from pooled registered pension plans," said NDP Leader Andrea Horwath. "It looks like the Liberals are ready to deliver results for lobbyists and insiders pushing these expensive plans."
Sousa announced the government would lower the $35 Drive Clean fee for vehicle emissions tests — although he hasn't yet decided by how much.
He also announced plans to make it easier for large pension funds to invest in public infrastructure projects, and said there would be tax changes to benefit low- and moderate-income investors, those who earn less than $70,000 a year. Ontario will change the way dividend tax credits are calculated to save about one million shareholders an average of $145 a year.
Sousa also warned of a possible hike in property taxes next year, and signalled other potential tax changes for businesses that may be in next spring's provincial budget.
"Measures under consideration to promote capital investment include restructuring research and development tax credits to encourage new spending and new incentives for investments in training and new equipment."
Wynne said the province still needs to keep a lid on public sector salaries, warning there's little cash for pay hikes for teachers, nurses and civil servants.
"We're going to need to work with our partners in the public sector to make sure that they understand that there isn't a lot of money for increases," said Wynne. "A large percentage of the provincial budget is salaries for employees, so we have to continue to constrain those costs."