A new rule from the Ontario government could be an early test of how much the province can afford to spend on infrastructure.
The province announced Tuesday that it will increase the allowable cost of a new road from $7.8 million to $10 million.
The government said that $7 million would be allocated for the construction of a toll road, as well as for the widening of an existing road to accommodate the new bridge.
The money will be allocated over a three-year period, with a goal of meeting the provincial capital budget by 2026.
Construction on the toll road will start in 2021, the government said.
The new rules could be the first step in the province’s plan to cut costs and improve efficiency.
Ontario is in the midst of an unprecedented downturn, with the economy struggling to recover.
The provincial economy shrank by a record 6.7 per cent last year.
The downturn has been exacerbated by high levels of unemployment and the closure of more than 500 factories.
New construction spending has increased in Ontario, but that’s not enough to boost provincial finances and help balance the budget, said David Madigan, the provincial auditor general.
Premier Kathleen Wynne and her Liberals have proposed cutting spending to help balance its budget.
Ontario has cut spending for its transportation system, health care, social assistance and education since 2011.
The latest budget included an increase in spending for infrastructure, which would be financed by higher gas taxes and a $1.4 billion capital budget.
A new highway project could be a game changer.
It could help the provincial economy, Madigan said.
But it’s a big ask for a government that has already put the brakes on the growth of Ontario’s population and its economic recovery.
“This is a very difficult and important project,” he said.
“But it’s also a big challenge for the government to meet its capital budget, and the public needs to have a say on that.”
This project is going to change the face of infrastructure across Ontario.
“The Liberals are expected to announce a plan to build a new bridge over the Niagara River in the coming months, as they try to help the economy.
While Madigan’s report doesn’t include the toll-road project, he did say that the new rules are part of a broader strategy to reduce spending and improve Ontario’s finances.