July 24, 2008 / 5:08 PM / in 9 years

Canada building to spend C$6.2 billion in Ontario

TORONTO (Reuters) - Canada’s federal government gave the struggling economy of Ontario a shot in the arm on Thursday, agreeing to invest about C$3.09 billion ($3 billion) in infrastructure projects, a sum that the province will match.

Spending by Ontario, Canada’s manufacturing heartland, will bring the total investment to $6.2 billion for improving roads, bridges, transit and other infrastructure. The funding arrangement will run until 2014.

As part of its Building Canada plan, the federal government has agreed to spend C$33 billion on infrastructure initiatives across Canada.

“The Building Canada infrastructure plan will help support economic growth, a cleaner environment and the overall prosperity of all Ontarians,” said Lawrence Cannon, Canada’s Minister of Transport, Infrastructure and Communities, at the announcement in London, Ontario.

”Substantial infrastructure funding was long overdue in this country and we’re getting it done.

Highways in northwestern Ontario, expanding rural broadband coverage in southern and eastern Ontario, clean drinking water and expanded public transit were all named as priorities to be addressed as part of the plan.

At the announcement, Canadian Finance Minister Jim Flaherty repeated his support of a permanent gas tax fund, which he said helps municipalities with long-term infrastructure needs.

“The single most important thing the federal government could do for the municipalities in terms of infrastructure was to make the gas tax funding permanent,” Flaherty said.

“It permits the municipalities to plan, it assures them of a stream of money going forward in perpetuity which they can use for example in entering into public/private partnerships.”

Funds from the gas tax are directed to environmentally sustainable infrastructure, such as public transit, water and waste water systems, solid waste management, community energy systems and, roads and bridges.

The gas tax fund will reach C$2 billion by 2009-2010 and stay at that level through 2013-14. In response to requests for stable long-term funding, the government said in its budget earlier this year that the fund would be extended at C$2 billion a year beyond 2013-14 and become a permanent measure.

($1=$1.01 Canadian)

Reporting by Frank Pingue; Editing by Frank McGurty

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