OTTAWA—The federal government is giving Ontario a financial break in a new funding deal to help pay for new transit and water systems over the next decade in a sign of compromise that may be extended to other provinces looking for new federal infrastructure cash.
The deal announced March 14 amounts to almost $22 billion in spending between the two levels of government, with the federal portion through to 2028 valued at $11.8 billion.
The provincial government will kick in a further $10 billion over the same time period, roughly one-third of project costs, short of the 40 per cent to match federal spending that cities had hoped for to ease their fiscal burden.
Infrastructure Minister Amarjeet Sohi said the cost-sharing agreement isn’t exactly what big city mayors requested last month, but it recognizes that provinces build other infrastructure that doesn’t receive matching federal funding.
Sohi said the flexibility in the Ontario deal will be repeated in other ways in the remaining deals the Liberals intend to sign by the end of the month.
“Flexibility means that every agreement is going to look different and some provinces may get flexibility in certain areas, other provinces may get flexibility in other areas,” Sohi said in an interview after the announcement in Mississauga.
“Needs are unique and that’s why our approach builds in flexibility where necessary.”
Provinces and territories also asked Sohi for flexibility in how they use federal funding, including letting them substitute federal dollars in place of their own to help pay for projects already on the books. Sohi said federal funding won’t replace existing provincial commitments and the majority of provinces are finding additional money on top of their existing plans.
The agreement with Ontario is the largest that Sohi needs to sign with provinces and territories to kick-start funding approvals under the second phase of the Liberals infrastructure program.
Signing the agreements is necessary before any of the $33 billion that Sohi oversees can flow to provinces and ultimately to municipal projects. Provincial and municipal officials have previously said that the time it took to receive funding approval under the first phase of the Liberal spending program contributed to delays in project start dates.
The majority of the spending will go to projects that the province will have to identify for funding. The federal government has already pledged about $2.1 billion of the $11.8 billion to build light rail in Ottawa and flooding protection in Toronto’s port lands and to help with the Scarborough subway extension.
The fine print of the deal with Ontario will be unveiled in the coming days, but the wording of the agreement may not exactly mirror one Sohi signed with Northwest Territories last week.
The federal-territorial deal gave flexibility to move money from public transit work to so-called “green” infrastructure projects that help communities mitigate the effects of climate change.
Sohi said the same flexibility may not be extended to provinces like Ontario with large public transit systems, such as in Toronto, which will receive almost $4.9 billion in transit funding.
“One of the outcomes we want to achieve through public transportation system investments is to reduce our greenhouse gas emissions,” he said. “So that’s why we created some flexibility for Northwest Territories where their transit needs are not as high so we will allow them some flexibility to use some of their money for green infrastructure focused on reducing greenhouse gas emissions.”
The territorial deal also laid out expected community employment benefits from any project and set timelines for project spending over the next decade. Similar wording exists in Ontario’s deal that will require the province to show how large projects are creating jobs for a “broader array” of Canadians in the construction sector.