Ontario Budget: Hospital projects highlight $30B increase in infrastructure spending

The 2017 Ontario Budget committed an additional $30 billion in infrastructure investment over the next 11 years. This brings the government’s total infrastructure investment over 13 years (2014-15 to 2026-27) to $190 billion, up from $160 billion. So far, three years into the 13-year investment, $34 billion has been spent with $156 billion still to come over the next 10 years.¹  Included in the remaining $156 billion are previously announced investments of $56 billion for public transit and $26 billion for highways, along with updated commitments of $20 billion for hospitals and $16 billion for schools. Further details on the updates to hospital and school commitments will be discussed below.

In 2017-18 total infrastructure spending in Ontario including third-party and federal contributions is set to surpass $20 billion. This would be an increase of $6 billion compared to 2016-17 (see Table 1).

Major Hospital Projects

The most significant announcement for the ICI sector in this budget is the approval of 5 major hospital projects. These projects account for $9 billion of the total $30 billion in new investment and will be spread out over 10 years. The $9 billion figure is also included in the $20 billion in total hospital capital investment mentioned above.    

Newly Approved Major Hospital Projects:

Hamilton Health Sciences – Hamilton Redevelopment Project:

The project will address Hamilton Health Sciences’ high-growth needs and update aging infrastructure to meet current hospital standards.

Niagara Health System – New South Niagara Hospital Capital Project:

The project will include construction of a new hospital in support of service transformation in the Niagara Region.

Trillium Health Partners – Broader Redevelopment Project:

The project includes investment in the Mississauga Hospital and Queensway Health Centre to add new spaces to address capacity issues, as well as renovate existing space.

Weeneebayko Area Health Authority – Replacement Hospital Project:

Ontario is committing to the provincial share of the project costs for a new hospital to serve the health care needs of the population along the James Bay coast. Ontario will work with the federal government to advance planning for this project.

Windsor Regional Health Centre – New Greenfield Hospital Project:  

The project will include construction of a new hospital in support of service transformation in the Windsor Region.

School Repair and Renewal

The Budget does not contain any additional funding for new schools, but does commit an additional $1.2 billion over the next 2 years for school repair and renewal. This builds upon a repair and renewal investment made by the government last Fall, and is included in the $16 billion total investment in schools over the next 10 years mentioned above.

Installing Sprinklers in Retirement Homes

One smaller item in the budget will catch the attention of Ontario’s sprinkler fitters. In order to help licensed retirement homes comply with new Fire Code requirements, the government committed to providing funding to small and rural retirement homes to install sprinklers. The Budget does not provide details on how much funding or when more details will be forthcoming, but the new Fire Code requirements need to be fulfilled by 2019 so presumably the funding will come before then.

Gas Tax

In order to increase transit infrastructure funding to municipalities and improve municipal funding predictability, the province will be doubling the municipal share of the gas tax. The municipal share will increase from 2 cents per litre to 4 cents per litre by 2021-22.  

Long-Term Infrastructure Plan

The government commits in the Budget to releasing a Long-Term Infrastructure Plan by the end of 2017. The purpose of the plan is to ensure that public infrastructure is aligned with the province’s needs. The plan will describe Ontario’s existing infrastructure portfolio and proposes strategies to meet infrastructure needs. 

Ontario’s Economic Outlook

The government’s economic forecast indicates that economic growth will slow over the next few years, but non-residential construction will increase. Ontario’s real GDP growth is forecasted to decrease from 2.7% in 2016 to 1.7% in 2020. Despite this slow economic growth, non-residential construction is expected to increase. Ontario’s data shows that there was a 4% decline in non-residential construction in 2016, and 0% growth is forecasted for 2017. Conditions are forecasted to improve though in 2018 with a 3.5% increase, followed by an even greater increase of 5.3% in 2019.

GDP forecast indicates that GDP growth will slow every year until 2020 (see Table 2)

Industry Consultations

The Budget includes commitments by the government to engage in industry consultations that would be relevant to the ICI sector. The first consultation relates to infrastructure procurement. The Ontario government is developing a Community Benefits framework to ensure that projects create benefits beyond the actual infrastructure project. One example the government provides is potentially providing construction jobs to disadvantaged community members.

The government is also planning industry consultations on its Ontario’s Highly Skilled Workforce (HSW) Strategy. The goal of the strategy is to ensure that Ontario is developing skills that correspond with future economic and job market needs. The government will be bringing together employers, educators, labour and other stakeholders as part of a Planning Partnership Table.

SOURCE: Ontario Construction Secretariat