Ontario should receive its fair share of the New Building Canada Plan

By: ICP
SEPTEMBER 16,2014

With the newly elected Wynne majority government, the province, along with all the municipalities in the Toronto CMA, must come up with the $2 billion of annual financing over the next 25 years to complete The Big Move.

The success of transit – and infrastructure maintenance and upgrades in general – requires not only municipal and provincial support but federal government involvement as well. It is the hope of the Institute that the Toronto CMA receives sufficient funding for its transit plans and that the federal government participate in this endeavour.

One of the ways the federal government can provide funding is in the 2013 budget, Jobs, growth and long-term prosperity: Economic Plan 2013, released last March, which details the New Building Canada Plan, touted as the nation’s longest and largest infrastructure plan. The New Building Canada Plan will provide Ontario approximately $11 billion in addition to the other programs that will be federally funded such as the GST rebate. This $11 billion is made up of the New Building Canada Fund and the Gas Tax Fund. Together, the province stands to receive 20 percent of the Plan’s monies.

While the New Building Canada Plan provides the province with an additional $3.3 billion more in funding overall, this 20 percent share of the new funding is actually a decrease from the 38 percent that was allocated to the province in 2007. Overall, the previous plan provided $33 billion in funding for infrastructure projects across the country, and the new plan increases this amount to $53 billion for projects over the next 10 years.

While the new plan is a welcomed addition to the refreshment and creation of Ontario’s infrastructure, transit is still severely neglected. The Institute found that the 34 transit projects listed as part of the entire Building Canada Plan and other programs were allotted a total of $2.2 billion. This amount was transferred to the lower order governments between 2007 and 2013, making up 5.2 percent of the total infrastructure amount available. Of the amount that Ontario is eligible for, transit accounts for 16 percent.

In some ways, Ontario receives a fair share of the previous Building Canada Plan monies. Ontario contributed over 37 percent to the Canadian Gross Domestic Product (GDP) in 2012, and makes up nearly 39 percent of its population. Receiving 38 percent of the two components of the previous Building Canada Plan is comparable, and overall the 32 percent is reasonable. However, if the province only receives 20 percent in the New Building Canada Plan, then the federal government must reconsider its distribution of resources and ensure that Ontario receives a larger share of the fiscal pie. This not only will decrease the amount of money available to the province’s infrastructure overall, it further limits the contributions to transit.

The federal government, through the New Building Canada Plan or another mechanism, is one of the few ways to raise the funds necessary for the next phase of The Big Move. Unfortunately, with the fiscal restraints of municipalities, any major capital expenditures must be supported with funds that come from higher order governments. If the federal government intends to enhance productivity, job growth and creation, it must be find ways to relieve the congestion of the Toronto CMA but working with municipalities and the province to build transit.