November 2016 – Article: New Thinking to Fund Infrastructure



At the outset, the federal Liberal government included some positives in its Fall Economic Update presented in the House of Commons earlier this month.  There was the establishment of a Canada Infrastructure Bank, the Government committed to adopting a global skills strategy and Ottawa will work to attract foreign investment and relax foreign investment restrictions.

In his speech in the House of Commons at the beginning of November, Federal Finance Minister Bill Morneau announced investment by Canada in infrastructure will grow by an additional $81 billion over the next 11 years, bringing the new total to $187 billion.

In addition, Morneau introduced plans for a Canada Infrastructure Bank that will deliver $35 billion through loans, loan guarantees and equity investments for more complex and revenue generating projects.  He says its objective is to seek out private sector capital in a manner that minimizes the amount of government support and gets the job done sooner.

Dominic Barton who heads up Ottawa’s Advisory Council on Economic Growth which recommended the idea of a federal Infrastructure Bank, is excited the federal government has chosen to accept the proposal.  He explains privatizing assets such as airports is common internationally and he points to Canadian pension funds already investing in London airports with little obvious controversy.

Barton thinks the real key however, is communication.  In an interview with the Globe and Mail, Barton says Canadians need to be sold on the economic benefits of private-sector investment in infrastructure – and the fees and tolls that may come with that.

Compared to a lot of other countries, Barton says Canada is at the far end of the spectrum of those who have tolls and user fees.  He says that’s why Infrastructure in such countries as Australia, the U.K. and even Brazil is better because they’re able to get the capital.

A perfect example is the discussion and process underway in Toronto surrounding a recently approved multi-billion dollar transit funding deal between the City and the Province.  Under the agreement – approved recently by the City’s Executive Committee – the Ontario Government will pay $3.7 billion for infrastructure that will support six new SmartTrack stations and the Eglington West LRT.  The amount for the infrastructure includes rail and track infrastructure, grade separations, electrification and fleet upgrades.  There are also assumed contributions of $1.2 billion from the Federal Government and $470 million from Mississauga and the Greater Toronto Airports Authority.

The Executive Committee of Toronto City Council approved the funding arrangement with a property tax hike as a potential revenue source.  A city staff report suggests a property tax increase of at least 2.1% to cover the City’s share which the report pegs at $2 billion.

While the residents of Toronto have made it clear that improved transit is desperately needed, TTC Chair and Ward 15 Councillor Josh Colle says it’s time to have a conversation about how to pay for it.  He doesn’t believe a property tax hike is the way to go.  He acknowledges however that the money has to come from somewhere, suggesting parking fees, tolls, sin and hotel taxes are all possibilities.

The fact that infrastructure spending is front and centre with the federal and provincial governments is good for Ontario’s construction industry.  Questions however still remain on how the new investments will be funded and what the newly created infrastructure bank will have in generating the massive infusion of capital that is required.






Fred Lehmann
Communications Coordinator,

Ontario Construction Secretariat (OCS)
180 Attwell Drive, Suite 360, Toronto, ON M9W 6A9
P 416.620.5210 ext. 222
F 416.620.5310