What To Know About The Proposed Ontario Infrastructure Bank 

The proposed Ontario Infrastructure Bank is met with mixed reactions, with questions raised about its necessity, potential benefits, and lessons learned from the federal counterpart’s experiences.  

About the Bank

Ontario Infrastructure Bank seeks to attract private-sector investment for various projects, including long-term care homes, nuclear reactors, and student housing. 

The government aims to present this initiative as a way to facilitate infrastructure development while sharing risks and returns with private investors, ultimately reducing the financial burden on taxpayers.

The plan was announced as part of the Ontario government’s fall economic statement, which revealed a current deficit of $5.6 billion, four times higher than the initial budget projection.

The Purpose and Skepticism:

The infrastructure bank is being touted as a way to finance projects that might not otherwise proceed. 

However, Brian Lewis, a former chief economist for the province, expressed skepticism, as Ontario’s primary challenge has been project completion, not funding. 

While the government plans to invest $185 billion in infrastructure over the next decade, the need for the infrastructure bank’s existence remains unclear.

Financing and Funding:

Ontario currently borrows money to finance these projects through bonds, which provide returns to investors. The infrastructure bank may need to offer higher returns to attract private investors, potentially increasing costs.

The government is providing the bank with $3 billion in startup funding from the public purse. While Canadian pension funds are the primary target, the bank is open to investment from foreign pension funds and private equity firms.

Reducing Taxpayer Burden:

Advocates argue that attracting private investment will reduce the financial burden on taxpayers. 

Private capital, especially from institutional sources, is eager to invest in Ontario’s infrastructure projects, provided the right opportunities are presented.

Projects and Investment:

The bank initially intends to focus on long-term care homes, energy infrastructure, affordable housing, municipal and community infrastructure, and transportation. 

Notably, small modular nuclear reactors are considered for financing. Investment funds would receive returns from revenue streams generated by these projects, sharing the project risks with the bank instead of burdening taxpayers.

Federal Mistakes:

The federal Canada Infrastructure Bank, established in 2016, initially faced a lack of investor interest due to narrow project criteria. 

Ontario’s government, while pointing to the federal bank as a model, faces concerns about repeating the federal mistakes.

Mixed Reactions:

Desjardins financial group seeks more details to assess the program’s efficacy. 

The Ontario Teachers’ Pension Plan is open to investments but requires more project information. 

The Ontario Long-Term Care Association supports the bank in helping long-term care homes access affordable financing.

Launch Date:

The government has not provided a specific launch timeline for the infrastructure bank, which will be established as a provincial agency with government-appointed directors. 

Further details are expected to be announced in the coming weeks and months.

Source: CBC News

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