The Building Ontario Fund is betting on an unproven approach to jumpstart infrastructure projects across the province. The agency's CEO Michael Fedchyshyn says the fund is targeting risky greenfield projects that private capital won't touch—like the $20.5 billion small modular nuclear reactors under construction in Ontario, not expected online until 2030. The fund also invested in long-term care facilities where economics weren't attracting enough private money, arguing that savings from housing seniors in care homes instead of hospitals will count toward the fund's "total return". It's a novel strategy: government steps in where markets won't, then tries to sell its stake once projects become less risky.

But here's the problem. Research from the Fraser Institute shows this kind of government infrastructure push rarely delivers what it promises. Many studies from the past few decades indicate low or no short-, medium-, or long-term gains to growth from public sector infrastructure investments. Many governments, including Canada's, operate on the assumption that a dollar of public infrastructure investment is worth more than a dollar in the long run—but data suggest this isn't the case, and that's before accounting for the cost of taxation required to fund public spending. The research points to a fundamental mismatch between political timelines and economic reality.

The mechanics matter here. Even if the optimistic view of public infrastructure spending's economic impacts were theoretically correct, problems with choice of project (which involves politics), timing, and estimates of capital costs reduce the likelihood of success. Think about it: the Building Ontario Fund is essentially saying it can identify profitable infrastructure projects that pension funds and institutional investors—people whose job is finding good investments—have passed on. That's a bold claim. The future operation and maintenance costs of a new infrastructure asset can be up to 80 percent of the total lifetime cost, and the economic costs of the taxes that fund the infrastructure spending add considerably to the overall costs. These aren't small details.

Ontario's net debt is projected to nearly reach $500 billion by 2027-28, even as Premier Ford advocates for more large-scale government infrastructure projects involving ports, tunnels, and the Ring of Fire. The Building Ontario Fund represents a different angle on the same old playbook—creative financing instead of creative policy. Looking to discretionary public infrastructure investments as a response to economic downturns may be a poor policy choice. Whether Ontario's new approach can beat decades of disappointing data depends on execution that's eluded governments before. The province is gambling that being clever about financing can overcome what research suggests is a structural problem with how governments pick and deliver infrastructure projects.