On Track: Infrastructure Elements of Ontario’s 2016 Economic Outlook and Fiscal Review
November 17, 2016
This bulletin focuses on those elements of the Update of interest to the infrastructure sector.
CONTINUED COMMITMENT TO INCREASED INFRASTRUCTURE FUNDING
As its title would suggest, the Update includes an in-depth focus on Ontario’s infrastructure development plans. While the Update is not a budget and accordingly no new spending is included, it both affirms and offers greater detail on Ontario’s plans first detailed in the 2016 Ontario budget (Budget) to invest more than C$160-billion over 12 years in Ontario infrastructure.
Briefly, over the next 10 years, the Ontario government has allocated:
- C$55-billion to public transit
- C$26-billion to highways
- C$12-billion to capital grants for health infrastructure
- C$12-billion to capital grants for child care and education
- C$3-billion to capital grants for post-secondary infrastructure
- C$30-billion to other infrastructure investments including affordable housing, tourism and cultural centres
A CONTINUED FOCUS ON TRANSIT AND TRANSPORTATION
Consistent with the Budget, the Update highlights Ontario’s commitment to transportation and transit renewal and development.
Notably, the Update confirms that Ontario is moving forward with the GO Regional Express Rail (RER) strategy, and provides some further details on many key elements of what will be one of the largest infrastructure projects in North America. While specifics of some RER elements are still in the planning stages, procurement for infrastructure work on the Barrie, Stouffville, Lakeshore East, Lakeshore West and Kitchener rail corridors is underway. While electrification in core areas along five of the seven GO rail corridors is mentioned, no details are provided as to how this part of the RER project will be implemented or procured.
While the Update takes note of the fact that the GO Transit system and RER infrastructure will also be the foundation for the SmartTrack proposal in the City of Toronto, the Update includes no specific guidance as to how an integrated GO RER/SmartTrack concept will be realized or if and how the province will be involved.
Other pending transit projects in the Greater Toronto and Hamilton Area (GTHA) reaffirmed in the Update include:
- “The Big Move” priority projects: Initiatives recently announced include an investment of more than C$200-million to support the planning and design work for transit projects included in the regional transportation plan, including the Yonge North Subway Extension, Relief Line and Durham–Scarborough Bus Rapid Transit
- Hurontario Light Rail Transit (LRT): This project — now in procurement — includes 22 stops over 20 kilometres of dedicated rapid transit between the Port Credit GO Station in Mississauga and the Gateway Terminal at Steeles Avenue in Brampton, with connections to GO rail and local bus services
- Hamilton LRT: Although not yet in procurement, Ontario confirmed plans to invest up to C$1-billion towards the capital construction costs to build a new LRT line in Hamilton
Some major projects already under development outside the GTHA were also noted, including the Ottawa LRT stage 2 Project, the Region of Waterloo transit hub and ION Stage 1, and GO rail service expansions to Waterloo Region and the Niagara Region.
OTHER KEY PROJECTS
While the Update’s infrastructure discussion focuses on transit, Ontario is also continuing to invest in the repair and improvement of roads and highways, including Highway 69, Highway 407 and high-occupancy toll lanes for the Queen Elizabeth Way. Outside the GTHA, major road and highway improvements include Highway 417 in Ottawa, Highway 6 between Freelton and Guelph, and Maley Drive in Sudbury.
The Update confirms Ontario’s intention to work with First Nations and other partners to move forward with greater access to the Ring of Fire and remote First Nation communities, although specific details are absent.
Although no new major healthcare initiatives are announced in the Update, it is noteworthy that over the next five years, 18 hospitals across Ontario will complete major renovations or rebuilds.
Currently, construction is underway at several hospitals, including William Osler Health System’s Etobicoke General Hospital, Hawkesbury and District General Hospital, St. Joseph’s Care Group in Thunder Bay and the University of Ottawa Heart Institute Cardiac Life Support Services Redevelopment Project.
Projects in the pipeline include Toronto’s Centre for Addiction and Mental Health (Phase 2), the New Groves Memorial Community Hospital in Fergus and Centre Wellington Region, and a new health hub in Orléans.
The Update notes that Ontario has committed C$1.1-billion over two school years to improve existing school infrastructure across Ontario, which is in addition to C$1.6-billion in existing funding allocated for repairs and renewal. Northern schools will receive an extra C$120-million, bringing the total investment for the region to C$300-million over the next two years.
An additional C$3-billion has been allocated to improving post-secondary education infrastructure. While the funding will in many cases be spread out across the province in smaller individual projects, there will be a significant investment of up to C$180-million in two new university-led post-secondary sites in Brampton and Milton focused on science, technology, engineering, arts and mathematics. Ontario will launch procurement for these projects in January 2017.
This plan is the second phase of Ontario’s major expansion in post-secondary infrastructure. In May 2015, Ontario announced the creation of the York University–Markham Centre campus in partnership with Seneca College, which is currently in development.
The Update includes only minor items of note to those involved in the power sector. While it confirms that Ontario continues development of the next Long‐Term Energy Plan (LTEP) via formal consultations with stakeholders in the province’s electricity sector, the next LTEP is not expected to be released until the first half of 2017.
With respect to the September suspension of the second round of the Large Renewable Procurement (LRP II) process and the Energy‐from‐Waste Standard Offer Program, the Update estimates savings of up to C$3.8-billion in system costs, relative to previous forecasts, as a result of the suspension while noting that Ontario’s current electricity system is well positioned to continue to meet provincial needs.
BUSTING THE BUDGET?
In short, the Update continues the Liberal government’s previous platform of increased infrastructure spending across a wide variety of sectors. However, it also highlights the fact that Ontario’s sustained commitment to a high level of infrastructure-related spending is not without cost. As noted in the Budget, achieving the government’s ambitious agenda will require a transfer of slightly more than C$400-million in contingency funds from Ontario’s coffers for the current fiscal year. While the Update leaves open the question of whether there is in fact sufficient funding to carry out the province’s ambitious plans in future years (that is really a task for the 2017 Budget), a high continued level of spending on infrastructure will clearly present challenges in the coming years. As a result, innovative sources of funding, including Alternative Financing and Procurement and asset optimization will remain key to meeting Ontario’s ambitious agenda for infrastructure.
For further information, please contact:
Catherine Doyle 416-863-4160
Mark Johnson 416-863-3318
Vivian Kung 416-863-4253
Judy Wilson 416-863-5820
Marianne Smith 416-863-3156
Alain Massicotte 514-982-4007
Jeffrey Merrick 604-631-3386
Anne Stewart 604-631-3313
Carrie Fleming 604-631-3367
or any other member of our Infrastructure group.
Posted in: Infrastructure
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