On February 10, 2021, the federal government announced a $14.9 billion plan for transit infrastructure over the period 2021-2028. Spending would start at a relatively low level with $5.9 billion spread over the first five years, but would then ramp up to $3 billion annually in what is supposed to be a permanent program.
The ink was hardly dry on the announcement when there were great huzzahs! from various circles that finally these was going to be federal money in transit. Suspicious soul that I am, I went looking to the backgrounder with more details, but came up dry.
For as long as anyone can remember, there has been a huge problem with the difference between announcements, “commitments” and actual spending. Following the money can be like a game of Three-card Monte where you’re never sure if there was a Queen on the table to begin with. The gullible marks believe that they can follow the Queen and are astounded when she is not there.
Before Toronto starts to spend billions, it is important to understand two things:
- This is a national program. Assuming that the pot is divided based on population, Ontario will get about 40% of this or $6.36 billion over eight years. Toronto proper (as opposed to the GTA or the Census Metropolitan Area) is about 20% of Ontario. This leaves the City with about $1.27 billion. This would build a few subway stations at current prices.
- The feds usually defer to the provinces in allocating funding, and so Ontario would control which projects were favoured. Queen’s Park could choose to spend all of Toronto’s share on “Ontario” projects built within the City, notably the Ontario Line and the Scarborough Subway Extension.
Rummaging around in Infrastructure Canada’s website, I came upon an interesting pie chart for an earlier program, the Investing in Canada Infrastructure Program, or ICIP for short. Although about $6.8 billion is earmarked for Ontario, $6.12 billion is unallocated. The basic problem is that the feds cannot approve spending if the province does not make an application.
A not-uncommon problem with funds like this is that they don’t really exist until something is approved, and if they are not spoken for by a drop-dead date (usually the end of a fiscal year), the funding evaporates. Note that according to this chart the cutoff date for intake of projects was in October 2019, and only 16 applications with a value of $651 million are awaiting review.
This led me to download the project list to see where the approved money went. Here is a subset of all projects with an approved value of $1 million or more in descending order. The list includes all projects under the five headings above although the lion’s share of the funding is in the transit group. It also includes two projects funded through the Infrastructure Bank (which is a separate source) for completeness.
The largest allocation is to the GO Transit ON-Corr (formerly RER) program, followed by the Ottawa LRT Stage 2. These are the only two items above $1 billion.
Toronto rapid transit projects are not well represented on this list. The only substantial amount ($333 million) is allocated to the Finch West LRT. Smaller amounts for design work are allocated to the Relief Line, SmartTrack, Eglinton West and Eglinton East. There is a lot of money for GO expansion.
I wrote to Infrastructure Canada asking for clarification of the relationship between various programs and to determine whether any of them overlapped such as funding this week’s announcement with unspent money from an earlier program.
- Is any of the $14.9 billion already earmarked for previously announced projects such as the Scarborough Subway?
- What is the status of the unallocated $6.12 b in the ICIP? Is it still available, over and above the $14.9 b, to fund projects?
- Does this announcement have any effect on the federal gas tax which flows to provinces now in support of transit projects?
In reply to the first question, Infrastructure Canada replied (in an email of February 12, 2021) that the $15.9 billion is all new money.
1. The announcement for a permanent public transit funding made on February 10, 2021 provides $14.9 billion for public transit projects over eight years, which includes permanent funding of $3 billion per year for Canadian communities beginning in 2026-27. This funding is separate from funding currently available under integrated bilateral agreements in place with provinces and territories, and will complement the efforts of the Canada Infrastructure Bank.
In the first five years, $5.9 billion will be made available starting in 2021 to support the near-term recovery of Canadian communities by:
Building major public transit projects and provides dedicated planning funding to accelerate future major projects.
Supporting the deployment of zero-emission vehicles and related infrastructure, complementing the work of the Canada Infrastructure Bank.
Meeting the growing demand for active transportation projects, including by building walkways and paths for cycling, walking, scooters, e-bikes, and wheelchairs.
Helping Canadians living in rural and remote areas travel to and from work more easily and access essential services, by working with rural, remote, and Indigenous communities to identify and create transit solutions that meet their needs.
This is new funding for public transit. Further details on the near-term funding announced on February 10, will be shared in the coming months.
The funding announced also delivers on the government’s commitment to provide $3 billion annually in permanent support for public transit. This funding will become available in 2026.
Over the coming months, the government will seek to facilitate partnerships between all orders of government, Indigenous communities, transit agencies, and other stakeholders to develop an approach to permanent public transit funding that offers the greatest benefits to Canadians.
With respect to the unallocated ICIP funds:
2. Under the existing Investing in Canada Infrastructure Program, which is delivered through bilateral agreements, provinces and territories are responsible for submitting their infrastructure funding priorities to the federal government for funding consideration and approvals.
The unallocated funding under the Investing in Canada Infrastructure Program continues to remain available to Ontario communities for their funding priorities.
Infrastructure Canada continues to work with the Government of Ontario on their priority transit projects.
As for the gas tax allocated to provinces:
3. The recent announcement for permanent public transit funding has no bearing on the federal Gas Tax Fund or communities’ allocations under the Fund.
As part of COVID-19 response efforts, the Government of Canada delivered its full annual federal Gas Tax Fund allocation early this year to provide $2.2 billion quickly to local communities so they have the resources available to start projects now that will create jobs and help revive local economies.
It is good to know that funding from other sources is not affected, but equally important to note that Ontario is still sitting on (in the sense that the money is not yet applied for) $6.12 billion in ICIP, an amount close to all they will received under this week’s announcement over the next eight years.
Infrastructure Canada concluded by saying:
Infrastructure plays a vital role in promoting economic growth, creating jobs and improving our quality of life. This is why we continue to work closely with the Province and ask that Ontario prioritize its projects and submit complete funding applications in a timely manner, so that we can get investment funds moving and get Ontarians working this construction season.
Hint. Hint. Ontario. Apply for this money so that we can actually get people to work.
There is a basic problem with stimulus programs because the desire is to spend as soon as possible to get the effect of new money flowing to jobs. The big projects like new subway lines are still in the design stage, and much construction will not begin for several years. Indeed, Toronto once faced a problem where it could not spend all of its allocated stimulus funding, and the TTC soaked up this money by making a huge purchase of buses. This sort of ad hoc spending does not establish priorities based on need, but simply on the speed at which cash can be shovelled out the door.
There may be $6.12 billion looking for a home, but spending it soon will be a challenge.
The bottom line in all of this is that the federal announcement’s heart is in the right place, but the money that will come to Toronto and the GTHA is small compared to our needs. Every bit helps, but the danger now is that with an announced program, the federal taps will be turned off.