October 19, 2005

Remarks to the Association of Municipalities of Ontario
by David Caplan, Minister of Public Infrastructure Renewal

Check Against Delivery.

Good morning ladies and gentlemen.

Thank you for inviting me to join you again, and for allowing me a second opportunity to talk about a subject I find very exciting: the renewal of Ontario’s public infrastructure and the partnership between the province and municipalities that is making that renewal possible.

When the McGuinty government came to power two years ago, we saw ourselves and the people saw us as agents of change.

We didn’t run for election to get a job; we wanted to form a government to do a job.

And part of that job is improving the way the public affairs of Ontario are managed including our investments in public infrastructure.

We view our infrastructure investments as ways to achieve the specific economic and social objectives people want: better roads and transit; better schools and educational opportunities; better healthcare; and a more successful and prosperous society.

Those are the things you want too.

So it is not surprising that we have common priorities and are working toward common outcomes.

Certainly, the McGuinty government knows the value of our partnership with municipal governments and the growing spirit of co-operation and collaboration we are developing.

I want to talk today about the major challenges we face, and some of the steps the government is taking to deal with them.

Perhaps the most difficult task we face — and by “we” I mean public officials at every level — is finding sustainable, predictable, and practical methods of financing public infrastructure.

We need the infrastructure. It is absolutely essential to our economic success. And we can’t put it off any longer.

But decades of underinvestment and neglect have left us with a massive repair bill and a crying need for new facilities.

We need to invest more than $100 billion in public infrastructure over the next 30 years. That is beyond the capacity of this government — of any government — if we rely exclusively on traditional methods.

So what are we going to do about it?

The McGuinty government has developed a wide-ranging and thorough strategy to renew public infrastructure in this province.

It incorporates two distinct elements.

• The first is reforming the methods we use to procure, finance and manage public assets.
• The second is a rational, coherent and comprehensive plan to co-ordinate public capital investments so we build the right things in the right places.

Both of these initiatives — the process and the plan — are moving forward at the same time as they must. But the changes in the process are perhaps what you see first at the municipal level.

The new process is embodied in a remarkable document we call Building a Better Tomorrow.  I’m sure most of you are already familiar with it.

All projects in which there is a substantial provincial interest are now subject to the province’s infrastructure planning, procurement and management framework.

This new process is characterized by…

• openness and transparency in building public projects
• by careful management of the procurement process to get a fair deal every time
• by careful management of the construction process, so projects come in on time and on budget
• and finally, by careful management of the resulting public asset, so it lasts longer and performs better.

We have also developed better ways to fund the infrastructure we need.

Make no mistake. Most of the infrastructure we build in the next five years will use traditional government funding models.

But relying exclusively on those traditional models will not work.

So we are developing a broader range of investment models, to help municipalities and other agencies in the broader public sector.

• We have given municipalities access to a new revenue stream from the gas tax — about $1.4 billion in total — that is available for infrastructure investments.
• We are negotiating shared-cost agreements with the federal government that will help municipalities directly fund infrastructure projects.
• We have expanded the ability of municipalities to borrow — on favourable terms and over longer periods of time — to build the infrastructure they need.
• We are establishing life cycle costing methods that — over the course of time — will reduce the cost of infrastructure by making it last longer.
• And we are developing alternative financing and procurement strategies that will make new sources of capital available for large-scale infrastructure projects.

Let me add a few words about some of these initiatives. We can discuss them in more detail in the question and answer session if you wish.

OSIFA

I think most municipal officials will be familiar with Ontario Strategic Infrastructure Financing Authority — OSIFA. It is a good example of the new financing methods that will help municipalities build infrastructure.

OSIFA offers Ontario municipalities loans at lower rates and over longer terms — up to 40 years — than would generally be available through traditional financing sources.

OSIFA loans can also be used to finance the municipal share of COMRIF projects.

OSIFA opened another round of applications in August, including applications for culture, tourism and recreation projects. Many of you requested this change.

I am happy to tell you today that the deadline for applications in this round has been extended until February 3. 

For those of you who have already applied, I have approved these applications, and have asked OSIFA staff to begin to work with the municipalities that applied in this round.

AFP

We are also developing what we call alternative financing and procurement strategies — AFPs for short — that allow us to use private capital pools to build the large-scale projects we need now instead of delaying them until traditional financing is available.

But the most important points to remember about AFP are these:

• First, it applies to a relatively small number of projects;
• Second, it is not privatization of public assets; it is a method of financing public assets that will allow us to build more and build sooner;
• Third, it involves procurement and negotiation strategies that will protect the public interest from cost over-runs and late delivery of projects.

For some large projects, our choice is between building now using alternative sources of financing or doing without.

But most municipal projects will not be affected.

ReNew Ontario

The plain fact is that we cannot build everything we need, all at once.

So we have to set priorities and plan our spending to get the best possible results from the resources we have.

That is exactly what we have done.

By the year 2010, Ontario and its partners will invest more than $30 billion in public infrastructure.

The details of those investments are discussed in ReNew Ontario, a strategic plan that sets out our investment priorities for the next five years.

This is a comprehensive, coherent, rational blueprint for the future that guides our decisions about what to build, and when to build it.

And it extends the planning horizon, so that it corresponds better with the time it takes to build infrastructure, and the time we will be using it.

One result is that funding for projects is much more predictable. I know municipal officials find this predictability especially helpful.

Growth Plan

In this region, the Greater Golden Horseshoe, there is a further consideration.

In this region we must also find a way to accommodate almost four million new residents — equivalent to the population of Vancouver, Calgary and Edmonton combined — over the next quarter century.

We have to accommodate that growth without ruining the environment or destroying the character of our communities.

And we have to build the infrastructure these people will need without breaking the bank or burdening our grandchildren with too much debt.

The Legislature has now passed the Places to Grow Act, which authorizes the government to develop growth plans for any region of the province.

The first growth plan will be for the Greater Golden Horseshoe. You have probably already seen a draft version.

We are now consulting with municipalities and stakeholders affected by the growth plan. We expect to present a proposed plan for further discussion later this year.

We have also appointed a Provincial Development Facilitator to help municipalities, developers and community groups resolve issues relating to land use and infrastructure planning growth management and environmental protection.

All of these initiatives — better planning for growth, better allocation of infrastructure investments, access to better financing alternatives — are things we have to do in the same way that you have to lay the foundations before you can build the house.

But now it is time to move to the second phase to build on these foundations.

That is what we are doing now. We are moving into the implementation phase of these initiatives the phase where shovels go in the ground, and infrastructure is created.

This is an exciting time. This is when we see the pay-off for the long months of consultation and planning, the time when we see the renaissance of public infrastructure begin.

The McGuinty government sees municipal governments as allies and partners in that task. And we look forward to a long period of active cooperation and collaboration. We have a lot to do and we can do it best together.