Ontario plans to invest $3 billion (US$2.2 billion) into creating an arm’s-length infrastructure bank with a mandate to help build major projects in affordable housing, health care and transportation. 

The government of Canada’s largest province announced the proposed Ontario Infrastructure Bank on Thursday, confirming an earlier report by Bloomberg News. The provincial government wants to use the bank to attract private money from institutions such as pensions and insurance funds. 

Ontario itself is home to a number of large global investors in infrastructure, including the Ontario Teachers’ Pension Plan, the Ontario Municipal Employees Retirement System and Brookfield Corp.  

The bank’s initial focus will be on sectors including long-term care facilities, energy, housing, municipal infrastructure and transportation. The idea is to use the government cash to reduce the risk of certain projects, attracting more private capital.

The new agency will operate at arm’s length from the government, led by a board of directors that will appoint a management team to make investment decisions. 

Ontario Finance Minister Peter Bethlenfalvy announced the plans when he delivered an update on the province’s financial condition on Thursday. 

“I would love to see that get dedicated quickly,” he said in an interview, commenting on the initial funding of $3 billion, adding, “we have appetite for more, but I think that’s a reasonable place to start.”    

The Ontario initiative would follow a similar model to that of the Canada Infrastructure Bank (CIB), which the government of Prime Minister Justin Trudeau established in 2017 with a $35 billion budget. The federal initiative has faced criticism for its failure to pull in enough private capital or quickly get projects funded and completed. A parliamentary committee recommended scrapping it.

Over the past two years, the CIB has made investments at a faster pace and, in a September update, said it had so far committed $10 billion to 48 projects. 

“With regard to the Canada infrastructure bank, they took a long time to get up and running,” Bethlenfalvy said, pointing to the CIB’s recent record of making more investments. “We’re going to hit the ground running. I’m really a fan of learning from other people’s, let’s say, ‘challenges.’”

Ehren Cory, Chief Executive of the CIB, acknowledged in an interview Thursday that it took time for the agency to develop a pipeline of potential investments in the early years.

“We know that we got off to a slower start than I think we aspired to,” he said. “The reality is infrastructure projects are incredibly large and complex and do take some time to mature. But now, you fast forward and I think it’s a very different story.” 

The $10 billion the CIB has invested has attracted about $20 billion in additional private investments, grants and other funding, he said. “I think the reality is starting to really prove out the value.”  

The CIB said it advised Ontario’s department of finance on setting up the new fund, and Cory said the federal agency will look for opportunities to invest alongside the new provincial body.       

National infrastructure banks, some with a specific focus such as sustainability, have also been established in other countries, including the UK and Australia. 

Ontario’s population of 15.6 million is growing at a “near-record” rate, according to Desjardins. Faced with an acute housing shortage and affordability crisis, the province has set a goal of building 1.5 million new homes by 2031. 

Premier Doug Ford’s government in September reversed a contentious plan to allow development on environmentally protected lands around Toronto.