Did Sutcliffe Make A Shrewd Move? SARAVANAMUTOO

Published 02/01/2025 · Updated 02/01/2025

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Recently, the federal government announced it was providing $180 million over 10 years to the City of Ottawa for future transit capital projects and maintenance.

I’ve got four comments about the announcement.

1. Expect more announcements across the country

This is one of the first announcements from the Canada Public Transit Fund. Ottawa will be one of many Canadian cities to see new resources for transit capital projects. Brace for more announcements to come out of the $30-billion 10-year fund.

So far, I have seen six announced: $1.2 billion for Toronto, $664 million for Greater Vancouver, $180 million for Ottawa, $112 million for Mississauga, $14 million for Burlington, and $2.2 billion for 42 smaller municipalities in Ontario. All 10-year deals for transit capital projects or maintenance.

2. Middle of the pack

For the City of Ottawa, $180 million sounds good. However, on a per-capita basis, we might have hoped for more. When you divide the announcements by the number of residents, Toronto got more than double what Ottawa received.

3. Not a response to Fairness for Ottawa

I’ll give credit to Mayor Mark Sutcliffe that during his remarks, he did not claim this as a response to his Fairness for Ottawa. That campaign was always about: payments in lieu of taxes (PILTs), transit operational funding, and the cost sharing of transit capital projects.

But as economists like me love to say, money is fungible. A cash injection into one budget line can effectively be used to support spending in another budget line.

The mayor was explicit about this. “Cash is cash. We can apply it. It closes the [OC Transpo budget] gap.”

He’s not wrong. From the press release, this money is for transit infrastructure maintenance, but which, according to the mayor, the city can apply to the operational budget.

There might be some creative accounting going on here, but clearly the federal government recognizes that cities need transit operational funding, and is finding a way to provide it while maintaining the fiction that federal funds only support transit capital projects.

4. 18 of 36

Interesting, the federal government has provided $18 million a year, which is equal to half of the OC Transpo $36-million 2025 budget shortfall.

The provincial government has always said it would come to the table with help for OC Transpo if the federal government stepped up.

Once the dust settles on the Ontario election, it will be interesting to see the provincial response.

Final thoughts

When I step back and look at Ottawa’s public transit funding announcement compared to those for Toronto and Vancouver, perhaps the Ottawa deal is not so bad.

$18 million a year from the federal government might force the provincial government to match with its own $18 million a year. And the City of Ottawa can always come back to the Canada Public Transit Fund for more money in the years to come (assuming the fund survives the next government).

If this week’s announcement does result in matching money from the next provincial government, then this might prove to have been a shrewd move from the Sutcliffe city hall.

Neil Saravanamuttoo is a former G20 infrastructure chief economist, director of CitySHAPES and the author of The 613 on Substack.