Built To Move: Ontario Accelerates Infrastructure Delivery In The 2026 Budget

On the release of its 2026 budget, "A Plan to Protect Ontario" (Budget), Ontario has reaffirmed its position as one of North America's most active infrastructure markets. While the Province's capital commitments remain consistent with prior years, the 2026 Budget marks a more consequential shift in emphasis: from announcing infrastructure to accelerating its delivery, aligning it with industrial policy and deploying it as a tool of economic resilience in a volatile global environment.

For infrastructure sponsors, lenders, contractors, institutional investors and Indigenous partners, the implications are less about the size of the pipeline—already well understood—and more about how projects will be advanced, financed and de-risked in practice.

From Capital Commitments to Accelerated Delivery

Ontario's capital plan—now exceeding $210 billion over ten years—continues to underpin the Province's economic strategy. What distinguishes the 2026 Budget, however, is the explicit prioritization of speed and execution. The Province highlights the need to "get shovels in the ground faster" and repeatedly emphasizes streamlining approvals and reducing regulatory burden.

This focus is reinforced by concrete measures. The Province continues to advance its One Project, One Process framework to coordinate approvals for major resource and infrastructure projects, and has entered into cooperation arrangements with the federal government to reduce duplication in environmental and impact assessment processes—most notably in connection with the Ring of Fire. Significantly, Budget includes the Province's commitment to accelerate all-season road access to the Ring of Fire by up to five years, with construction targeted to begin in June 2026 and initial openings by 2030.

From a legal and commercial perspective, this acceleration agenda is significant. Projects that are tapped to be completed on compressed timelines will face increased pressure on procurement processes and front-end diligence so as to ensure that unresolved environmental, geotechnical or stakeholder issues are not pushed into the construction phase. Managing these issues may affect bid pricing, contingency structures and the allocation of relief events and change risk in project agreements.

Mining and Critical Minerals: Regulatory Coordination and Infrastructure Dependency

The 2026 Budget continues to position Ontario's critical minerals sector as a strategic priority, but with a more pronounced emphasis on execution and coordination.

The Province highlights the advancement of its One Project, One Process framework, with three specific projects identified as moving through accelerated approval pathways.

At the same time, the Budget underscores the interdependence between mining development and infrastructure delivery. The commitment to advance road access to the Ring of Fire, supported by agreements with First Nations and coordination with the federal government, reflects a recognition that infrastructure is a precondition to resource development.

Legally, these developments raise important questions regarding the integration of approval regimes and statutory decision-making authority. While coordinated processes may seek to reduce duplication, proponents will need to navigate an evolving framework in which the interaction between provincial and federal approvals—and the discharge of consultation obligations—remains subject to ongoing refinement.

Energy Infrastructure: Strategic Investment, Government-Led Delivery

Energy infrastructure—particularly nuclear—emerges as a central pillar of the Province's economic and industrial strategy.

The Budget highlights several major initiatives in the nuclear space, including:

• completion of the Darlington Unit 4 refurbishment
• continued development of small modular reactors (SMRs) at Darlington, supported by a $1 billion provincial investment through the Building Ontario Fund; and
• advancement of planning for the Wesleyville large-scale nuclear generation project.

At the same time, the Budget makes clear that nuclear development continues to be government-led, with Ontario Power Generation playing a central role and provincial capital—directly and through vehicles such as the Building Ontario Fund—supporting delivery.

The Budget also points to a broader evolution in Ontario's energy mix, including continued advancement of energy storage initiatives and a more substantive treatment of carbon capture, utilization and storage (CCUS). In February 2026, the Province began accepting applications for commercial-scale geologic carbon storage projects—a regulatory milestone that creates new investment opportunities for energy-intensive industries. The Budget projects that these projects could reduce greenhouse gas emissions by five to seven million tonnes annually, create over 4,000 jobs and reduce costs for Ontario industries by nearly $1 billion. For infrastructure participants, the commencement of a regulatory framework for geologic carbon storage represents a meaningful development, signalling a more diversified approach to managing demand, reliability and decarbonization alongside baseload generation.

The Missing Link: Transmission Build-Out and Indigenous Partnership

While the 2026 Budget places primary emphasis on generation, it also underscores—both explicitly and implicitly—the critical role of electricity transmission infrastructure in unlocking Ontario's broader economic and resource agenda.

This is most clearly reflected in the Province's commitment to enabling development in the Ring of Fire, where infrastructure planning extends beyond roads to include energy transmission connections necessary to support mining and industrial activity, delivered in partnership with First Nations.

In this context, projects such as the Greenstone Transmission Line (and related northwestern transmission expansions) illustrate the emerging model: transmission infrastructure developed as part of integrated corridors, often in coordination with Indigenous communities and tied directly to resource development timelines. The Budget's emphasis on agreements with First Nations and coordinated project delivery signals a continued evolution toward Indigenous partnership in both infrastructure development and long-term participation, including potential equity and governance roles.

From a legal and commercial standpoint, many transmission projects – including Greenstone but also the Barrie to Sudbury Transmission Line and the proposed underwater high-voltage transmission line from Darlington to downtown Toronto (all announced or advanced in the Budget) – raise distinct considerations relative to generation, including corridor acquisition, environmental approvals, rate regulation and cost recovery frameworks, as well as the structuring of Indigenous participation across linear infrastructure assets that traverse multiple traditional territories.

Building for Security: Defence Infrastructure and Strategic Positioning

Notably, the 2026 Budget introduces defence as an increasingly important pillar of Ontario's infrastructure and industrial strategy, reflecting a broader shift in geopolitical and economic priorities.

The Province highlights its efforts to position Ontario—and in particular Toronto—as the headquarters for the proposed Defence, Security and Resilience Bank (DSRB), an initiative expected to generate significant direct and indirect economic activity.

More broadly, the Budget links infrastructure investment to the growth of a domestic defence industry, including advanced manufacturing, research and development and supply chain capacity. While not framed as traditional infrastructure in the transit or energy sense, these investments point to a widening definition of "infrastructure" to include strategic, security-oriented assets and facilities.

For industry participants, this signals emerging opportunities at the intersection of infrastructure, industrial policy and national defence—involving traditional sectors such as steel but also potentially involving new delivery models, procurement frameworks and partnerships between government and private sector participants in a sector that has historically been more centralized and controlled.

Transportation Infrastructure: Delivering at Scale

Combined initiatives in the transportation and transit infrastructure areas remain a cornerstone of Ontario's capital plan and contain the largest share of the capital budget with $94 billion over 10 years, with continued investment across highways, subways and regional transit.

In addition to the all-season road to the Ring of Fire (discussed above), the Budget highlights:

• ongoing construction of Highway 413 and the Bradford Bypass;
• feasibility work for a potential tunnelled expressway under Highway 401;
• continued subway expansion, including progress on the Ontario Line, Scarborough Subway Extension and Yonge North Subway Extension; and
• continued expansion of GO Transit services.

These investments are framed explicitly as a response to the economic cost of congestion—estimated at $56 billion annually and projected to increase significantly absent intervention.

For industry participants, the scale and concurrency of these projects continue to require navigation of system-level risks, including labour constraints, supply chain pressures and interface challenges across multiple project sites. These dynamics may continue to drive evolution in delivery models in the transportation space, including greater use of collaborative structures or modified risk allocation frameworks to address coordination and market capacity issues.

Capital for Growth: Crowding in Institutional Investment

Budget 2026 contains an important development the infrastructure sector with the establishment of the Protect Ontario Account Investment Fund, a vehicle funded with up to $4 billion in provincial capital. The Budget states that this fund is intended to crowd in pension funds and other institutional investors into "economy-enabling" high-growth sectors, including artificial intelligence, defence, advanced manufacturing, life sciences, biotechnology and research and development in the critical minerals sector.

For institutional investors, this approach may expand opportunities to deploy capital in high-growth, economy-enabling sectors that the Province has identified as strategic priorities, but where early-stage risks have historically made private investment challenging. For project sponsors, it introduces new considerations around governance, alignment of interests and the role of government as both regulator and investor.

While the Fund is not expressly directed at energy or traditional infrastructure assets, it reflects a broader policy direction: the Province is increasingly prepared to co-invest alongside private capital to advance strategic projects.

Permitting and Approvals: Speed with Constraints

The Budget's emphasis on cutting red tape and streamlining approvals is a central component of its acceleration agenda.

However, these efforts must be understood within the broader legal framework evolving in Ontario (see our prior bulletins: Protect Ontario Through Free Trade Within Canada Act, 2025; theProtect Ontario by Unleashing our Economy Act, 2025, Protect Ontario by Building Faster and Smarter Act,2025 and Ontario Announces Streamlined Permitting Process For Advanced Exploration And Mine Development Projects), as well as the agreement relating to One Project, One Process, One Decision signed between Ontario and Canada specific to the Ring of Fire in December 2025). Streamlined processes remain subject to constitutional requirements, including the duty to consult Indigenous communities, as well as administrative law principles governing procedural fairness and reasonableness.

As a result, while approval timelines may shorten, proponents should anticipate continued scrutiny and the potential for legal challenge where processes are perceived to be insufficiently robust. Early engagement and comprehensive consultation strategies will remain critical to project success.

Funding the Need for Speed

The Province's infrastructure program continues to be supported by a material, but time-bounded, deficit profile. The 2026 Budget projects a deficit of $13.8 billion in 2026–27, before declining to $6.1 billion in 2027–28 and returning to a modest surplus by 2028–29. This trajectory reflects a deliberate decision to sustain elevated capital investment in the near term as a result of ongoing economic and geopolitical uncertainty. To support additional spending various areas – most notably in the Ring of Fire and for nuclear projects – Ontario is also specifically calling on the federal government's support in recognition of fiscal restraints, both in terms of capital spending and in other fiscal initiatives such as expansion of clean economy investment tax credits (ITCs).

For market participants, the implication is twofold: continued reliance on Ontario's strong access to debt markets to fund infrastructure, and a growing policy rationale for mobilizing private and institutional capital to support delivery and moderate the long-term fiscal burden.

Conclusion

The 2026 Ontario Budget signals a clear direction: accelerated delivery, closer alignment of infrastructure with economic and industrial policy, and a more active governmental role in mobilizing capital. In practice, this will require earlier and more rigorous front-end diligence, more sophisticated partnership and governance structures—particularly with Indigenous communities and institutional investors—and adaptation to evolving co-investment models that are reshaping how projects are advanced and financed.

The opportunity set remains significant across energy, transportation, mining and housing-related infrastructure. However, success will depend on navigating compressed timelines, regulatory reform and increasingly complex delivery frameworks.

Finally, the Budget's projected deficits underscore the cost of this accelerated agenda. While Ontario continues to rely on its strong access to capital markets, the scale of investment—particularly in regions such as the Ring of Fire—signals a continued need for additional capital support, including from the federal government, which the Province has called upon to match or exceed its commitments, as well as from private and institutional investors to help sustain delivery and share long-term financing burdens.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2025

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