May 12, 2005

Statement to the Legislature Concerning Ontario's Plans for Public Infrastructure
by David Caplan, Minister of Public Infrastructure Renewal

Check Against Delivery.

Good afternoon Mr. Speaker.

Today I rise to inform the House about our government’s exciting plans to launch a renaissance in public infrastructure and to strengthen the people of Ontario by investing in their skills, their health and their prosperity.

My colleague Minister Sorbara highlighted this unprecedented initiative in his budget yesterday. Now I intend to outline the next steps we will take, to the members of this House, and to the people we have the honour to serve.

I have spoken before about the urgent need to renew our public infrastructure in all parts of the province.

For many years past governments have neglected this critical element of our society. Roads and bridges are crumbling; universities and colleges must improvise to accommodate the crush of new students; water and sewer systems need to be modernized and many of our hospitals and healthcare facilities are out-of-date and over-crowded.

And we must prepare now to accommodate millions of new people who will settle in Ontario in the next quarter century.

Mr. Speaker we know that massive investments will be required to meet these needs; the status quo is not an option.

Our government is prepared to make those investments using a made-in Ontario approach that puts the public interest first. Yesterday’s budget presented showed the initial steps we are taking.

Over the next five years more than $30 billion will be invested in public infrastructure in Ontario by the government and its partners.

Those investments will reflect our key priorities in healthcare, in education and in the infrastructure that supports and sustains our economy.

Mr. Speaker, all of the $30 billion worth of infrastructure investment will be paid for with public dollars. The financing for some large projects will come from the private sector, but all of that financing will be repaid from public funds over time. It makes good public policy and fiscal sense to pay for infrastructure as we use it over its useful life. 

All major projects delivered through alternative financing and procurement models will be subject to the principles and the rigor of our infrastructure policy framework — Building a Better Tomorrow.

What is the make-up of this $30 billion investment plan over the next 5 years?

The largest component is the province’s own gross capital investment. This represents about $18 billion, and will be invested in key government priorities. It will include renewing and modernizing hospitals, upgrading and expanding our highways and transit systems, new affordable housing, support for key infrastructure in Northern Ontario, and municipal water systems, bridges and roads across the province. This also recognizes the federal government’s partnership based investments that flow through the province’s books, which we expect to total some $2 billion over the next five years.

The government also supports infrastructure renewal and expansion through operating grants to transfer partners such as school boards and long-term care facilities. This represents an additional $5.4 billion. 

The government will also provide financial support for the Good Places to Learn initiative and undergraduate, medical and graduate school expansion at universities. This will support investments of up to 4.8 billion.

Our commitment to provide our municipalities with gas tax revenues intended for public transit infrastructure to improve service and increase ridership adds an estimated $1.4 billion.

We estimate major alternative financing and procurement projects investment in the order of $2.3 billion. This will bolster our investment for infrastructure improvements to large-scale hospital, justice sector and other projects. 

This totals more than $30 billion. And as the Budget said, we are reviewing major government assets. We are committed to directing any net proceeds generated from asset sales to infrastructure as a first priority.

For the first time in our history, this government will soon be releasing a detailed plan — reaching to the year 2010 — that shows how and where we will build the public infrastructure that sustains Ontario’s economic success and how it will be paid for.

I will say more about the government’s five-year infrastructure plan in the coming weeks.

It implements important reforms in the methods we use to plan, build, finance and operate public infrastructure.

It extends the processes described in Building a Better Tomorrow, the infrastructure financing and procurement framework, which I released last summer.

And it encourages participation by the private sector — financial institutions and pension plans — in the financing and delivery of public infrastructure, under the proper conditions, and subject to appropriate controls.

In the past we have been stuck with the traditional view that government — and only government — finances and delivers infrastructure, using current revenue. And that’s part of the reason the infrastructure deficit has been growing.

Now we intend to vigorously pursue Alternative Financing and Procurement strategies.

These strategies will allow us to take advantage of private sector capital such as public pension funds, expertise and efficiencies to do far more in the next few years than we have in the past ... and do it on time and on budget. 

Design innovations, quicker and higher quality construction, operational efficiencies and the risk the private sector assumes for cost overruns and late delivery can more than make up for higher interest rates. The end result is that the private sector can often deliver projects that represent better value for the province. And, that is what we are most concerned with — better value for taxpayers not just lower interest rates.

Research done by the U.K. Treasury revealed that 88 per cent of projects pursued using alternative financing methods came in on time and on budget or early. And when there were cost overruns, they weren’t borne by the public sector.

Compare that with traditional means of procuring infrastructure, which delivered 70 per cent of projects late and over budget, according to the U.K. government.

Those methods will let us get on with the infrastructure work that absolutely needs to start now.

To help the broader public sector take advantage of the opportunities this approach offers, the government will create a new agency to support ministries, municipalities and the broader public sector in their transactions with the private sector.

The new Ontario Infrastructure Projects Corporation will directly oversee implementation of alternative financing arrangements for major infrastructure projects, subject to the direction of the government.

Mr. Speaker, the McGuinty government plans to strengthen our economy and our communities by investing in our people.

The steps have I have outlined today will improve the learning environment for our children; improve the delivery of health care; improve our capacity for world-class research and innovation; and enhance our economic competitiveness.

I fully expect all members of this House to support them.