Foulds was re-elected again in the 1985 election. The Progressive Conservatives, who had governed Ontario since 1943, were reduced to a tenuous minority government in this election, and were subsequently defeated in the legislature by an alliance of the Liberals and NDP. The Liberals formed government under David Peterson, and promised to implement some policies favoured by the NDP in return for support from that party in the legislature for two years. Foulds contributed to this accord by insisting that Peterson's Liberal implement travel grants for necessary medical travel for northern Ontarians. He served as Treasury critic and Northern Affairs critic from 1985 to 1987, and did not run for re-election in 1987.