Ontario Premier Kathleen Wynne is calling on the federal government to create a new annual transfer to the provinces specifically for infrastructure, in the same way that Ottawa already transfers billions each year for health care and social services.
The premier delivered a speech in Ottawa that outlines her proposal and called for infrastructure spending to be a key issue in the 2015 federal election campaign.
"As we enter an election year, I issue a challenge to all the federal parties and their leaders: Tell Canadians how you will help to build a stronger economic union across out country," she said, at a gathering of the Canada 2020 policy forum.
The premier said Ottawa should have a "Canadian Infrastructure Partnership" that would aim to spend 5 per cent of Gross Domestic Product on infrastructure.
"We are asking the federal government to do more," she said. "This new partnership could take any number of forms. The more efficient method of doing so would be a new and dedicated infrastructure transfer like the transfers for health, education and social services…We need to think big."
The Ontario premier said Ottawa should boost spending on infrastructure, despite its loss of revenues due to lower oil prices. She said Canada currently spends about 3 to 3.5 per cent of GDP on infrastructure and hitting the five per cent target would mean spending an additional $30-billiion from all levels of governments.
The federal government has signalled it is looking to cut spending to cope with lower revenues from falling oil prices. But Ms. Wynne said that is no reason to neglect the country's long-term productive capacity, noting that provinces are all dealing with a difficult fiscal picture.
Ottawa "is still talking about being on the verge of showing surpluses going forward," she said. "I see this as the right moment" to boost spending on infrastructure.
Speaking at the same time in London, Ont., federal Liberal Leader Justin Trudeau also spoke of the importance of infrastructure spending for the Canadian economy.
Both Mr. Trudeau and Ms. Wynne regularly support each other politically and infrastructure is expected to be a key part of Mr. Trudeau's 2015 election campaign. However the premier said she would be happy to announce infrastructure spending with federal Conservatives.
"This isn't about politics, or who gets credit," she said. "I'd be happy to put up as many Economic Action Plan signs as it takes to advance the economic strength of this province."
Provinces generally prefer transfers that have few strings attached and regularly bristle at federal requests to have a say in terms of which specific infrastructure projects will receive federal funding.
The federal government's $14-billion infrastructure fund is a 10-year program and Ottawa is currently accepting proposals for specific projects.
The application process has led to finger pointing between Ottawa and Ontario over the fact that there is still no list of approved projects even though the fund was announced in the 2013 federal budget.
The premier did not mention that Ottawa does already have a dedicated annual transfer for infrastructure. The $2-billion-a-year gas tax transfer to the provinces is for municipal infrastructure projects and Ottawa does not control how that money is spent.
The federal Conservatives doubled the size of the gas tax transfer, made it permanent and indexed its growth at 2 per cent annually.
Federal Finance Minister Joe Oliver's office issued a statement pointing to federal spending on infrastructure in Ontario.
"While our government continues to make record investments in infrastructure, we will balance the budget this year as we will continue to reduce taxes for Canadian families," said Mr. Oliver in a statement.