Introduction
In response to Donald Trump’s trade war, developing Canada’s national infrastructure is a hot topic in 2025. Both federal and provincial governments have been co-creating a shortlist of strategic nation-building projects and have taken actions to concentrate power to expedite those projects. While the prospect of major new infrastructure investment would seem a sensible response, the danger is that governments will squander tens of billions of public dollars on new pipelines and other fossil fuel infrastructure like liquefied natural gas (LNG) terminals—plus the fig leaf of carbon capture and storage (see Environment and Climate Change chapter) or misguided public-private partnerships that seek to generate private profits at public expense.
The AFB gets back to basics and invests similar dollar amounts into the real infrastructure upon which our prosperity depends. Water and sewer upgrades are boring, but they directly improve people’s quality of life and accommodate growth and more dense housing. Transit investments get people and goods moving. We also envision a different suite of national projects to better connect Canada, namely an east-west clean electricity grid, and new high-speed rail capacity.
Infrastructure underpins common prosperity and is key to creating good jobs, fighting climate change and building more inclusive communities. With the threat to Canadian sovereignty, we need the federal government to step up and build great projects that will reinforce our independence and position us for the future. This includes connecting big projects to Canadian supply chains for industries like steel and aluminum that are being adversely affected by the Trump administration, and the auto parts and assembly sectors for electric buses and other transit vehicles.
Overview
Municipal infrastructure
Local governments have long lobbied for federal funding to address infrastructure gaps from a generation of neglect. In the absence of federal and provincial funding, infrastructure responsibilities are “downloaded” to local governments that do not have the same tax base upon which to finance upgrades—and many local governments cannot run deficits. Municipal governments have tried to plug this funding gap with charges and fees on new development to pay for this infrastructure upgrading rather than higher property taxes.
Beginning with the 2017 federal budget, the federal government has helped bridge this gap with a 10-year infrastructure plan—a plan now in need of renewal. The 2024 budget included a Canada Housing Infrastructure Fund with $6 billion over 10 years towards infrastructure to support new, denser housing. The re-elected Liberals promised $1.5 billion per year for four years to support local infrastructure and reduce local government development charges by 50 per cent by paying for them directly. This is a good start but ultimately a very small number when spread across the country.
Beyond this, the party’s election platform had little to say about major reinvestments in local government infrastructure like roads, water and waste. Metro Vancouver needs billions for sewage treatment, Greater Victoria still emits raw sewage into the ocean, rivers and lakes around Winnipeg are polluted from 10 billion litres of sewage. In addition, many culture and recreation facilities, such as pools, libraries, and community centres, are in poor condition.1Canadian Infrastructure Report Card, 2019 Canadian Infrastructure Report Card: Monitoring the State of Canada’s Core Public Infrastructure, http://canadianinfrastructure.ca/downloads/canadian-infrastructure-report-card-2019.pdf.
Climate and energy infrastructure
Infrastructure is key for adaptation to a warming planet, including extreme weather events that are striking our communities more frequently and more severely. This means upgrades to dikes and sewer systems that can better handle extreme precipitation, and upgrades for cooling during extreme heat.
Canada long depended on fossil fuel extraction and consumption to drive the economy, and in the face of trade challenges, political leaders have sought to double down on the dirty industries of the past. This would be a mistake that diverts the country from the pathway to a clean and safe future.
Only through ambitious and well-funded public infrastructure can we achieve decarbonization. Despite ramping up climate action over the past decade, Canada is not spending at the level needed to compete in a world shifting rapidly away from fossil fuels and towards clean energy (see Environment and climate change chapter). Now is the time for the federal government to set out a multi-year investment plan that responds to the scale of the threats while rejecting red-herring solutions like carbon capture and storage.
Investments on this scale will drive deep decarbonization in every sector of the Canadian economy—and make life more affordable for Canadians through lower home energy costs and resiliency to external shocks, like recent inflation stoked by oil and gas prices. New public climate investments can embed sustainable well-being, build strong communities, and reduce economic inequality. Well-designed investments can also make meaningful steps towards healing relationships with Indigenous Peoples (see First Nations chapter).
Clean electricity is a cornerstone of these climate and energy infrastructure investments. BC and Manitoba are developing new clean electricity in conjunction with local First Nations. But too often these are in the service of powering up expanded fossil fuels.2Marc Lee, “Painting Itself into a Corner: LNG and the Climate-Affordability Trade-Off in B.C.,” Canadian Centre for Policy Alternatives, May 14, 2025, https://www.policyalternatives.ca/news-research/painting-itself-into-a-corner-lng-and-the-climate-affordability-trade-off-in-b-c/.
Canada needs to accelerate the development of an east-west clean electricity grid in conjunction with expanded EV infrastructure across the country. Enhanced cost-sharing infrastructure agreements with provinces and territories can expedite grid connections and permits, which currently present a significant bottleneck in the growth of public charging ports.
Public transit and high-speed rail investments
The announcement of a Toronto to Quebec City High Speed Rail (HSR) project, called Alto, is a game changer for transportation in Canada’s most crowded corridor. We simultaneously need to advance HSR in other priority corridors including a Western Canada route from Winnipeg-Edmonton-Calgary and Vancouver-Calgary and Toronto-Winnipeg to complete a national network in a generation. These HSR corridors could take advantage of the east-west clean electricity grid and expansion.
The Canada Public Transit Fund, first promised in 2024 is set to launch in 2026-27. The fund will provide stable federal funding, but its $3 billion is primarily aimed at supporting capital projects. For many, public transit is already a lifeline. A means to connect people to work, crucial services, and loved ones. However, transit systems across the country are strained and the federal government needs to step up with operating support. To move away from automobile dependence, public transit must be convenient, reliable and affordable. Federal operations funding could make transit a viable option for most people, most of the time.
To this end, we aspire to double the number of buses (electric/hybrid, Canadian-made) in local services within five years and triple it within ten, for more frequent, reliable local transit services in communities throughout the country. Inter-connecting local public transit networks through expanded VIA Rail service or alternative inter-city express buses can greatly improve mobility for people in small towns and rural areas—making it easier to get healthcare and other services, visit family or go on vacation. And stronger transit connections across Canada would benefit tourism.
As Canadians have learned with the disaster of Ottawa’s Light Rail Transit system, the public-private-partnership (P3) model simply does not work. In fact, rather than delivering its promise of saving money, its use has been strongly linked to rapidly escalating public transit construction costs, particularly in countries with little public sector expertise or transit-building know-how. We also tie our funding support for transit expansion to the creation of unionized jobs within the public sector.
Actions
The AFB will strike revenue-sharing agreements with municipalities, to give them access to the top two income tax brackets (only affecting those earning $172,714 and up). This would allow municipalities to raise additional revenues by taxing high earners, which the Canada Revenue Agency would administer based on home addresses. Municipalities would have autonomy over tax rates.
The AFB will renew existing fiscal transfers to municipalities, in the form of Canada-Community Building Fund agreements, expand it to reflect its decline in purchasing power due to inflation, and tie its annual growth to the economy. This would change its growth rate, currently fixed at two per cent, to instead create an escalator based on nominal GDP growth (or two per cent, whichever is more). The federal government will transfer additional revenues cities levy from access to income taxes through this existing program.
The AFB will create a funded mandate for VIA Rail to expand rail service across the country and establish dedicated project offices for high-speed rail connections in priority corridors. This funded mandate will include a $2 billion per year revenue source, pegged to inflation, that VIA Rail will have the authority to bank and borrow against. The AFB will abolish the Canada Infrastructure Bank and transfer its remaining public money to VIA Rail, so they can begin building expansion projects immediately. The AFB commits $50 billion in capital expenditures towards HSR projects, with the condition that they be public-led and run, not P3s.
The AFB will commit $20 billion over five years to build a clean electricity grid with a focus on interregional transmission and targeted investments in rural, remote and Indigenous communities. The AFB will create a new public electric vehicle charging infrastructure across Canada, in partnership with provinces, territories, and power utilities to cost share the build out of a national network of electric vehicle charging stations. This would fund provincial charging network plans that meet national standards for coverage, reliability and charger plug standardization.
The AFB will create a new role for the federal government in supporting public transit operations to facilitate expansion while keeping fares as low as possible. This AFB will invest an additional $35.4 billion dollars over 11 years (2026 to 2036) above planned transit spending by accelerating the start date of the forthcoming Canada Public Transit Fund, and expanding its role to include transit operations funding, which is crucial to growing ridership and reducing carbon emissions. Our goal is to simultaneously support transit expansion and keep fares affordable.
Operational funding will be included in a reliable, predictable baseline funding stream. To encourage cities to deploy faster transit, bonus operating funding payments will be delivered to cities based on the number of kilometres of dedicated transit priority (including bus, streetcar) lanes. To encourage efficiency, an incremental component of this funding stream will be tied directly to ridership growth. Cities would also be allowed to use operating funding to reduce the cost of transit fares.
This new program will also require that all federal funding supports the deployment of zero-emission buses with new procurement requirements, while compensating public transit systems for the additional cost. This new program will also negotiate city-region agreements with major cities to fund major public investments, including a revitalized Active Transportation Fund in a coordinated manner that aligns with housing supply, affordability and climate targets. This plan-based, rather than project-based, approach to funding will require cities to agree to minimum conditions designed to protect the erosion of affordability for housing stock and plan for increased densification and housing supply near frequent transit.
City-region agreements will also require cities to align transit and housing growth plans to mode shift and vehicle kilometre reduction (VKT) targets, with the federal government setting minimum expectations for what can be delivered based on city size, local circumstances, and the amount of federal funding. These local targets will add up to an overall national target to double public transit ridership by 2035.
This AFB will expand the Rural Transit Solutions program, alongside the Active Transportation Fund. This additional funding will support the expansion of the eligibility criteria for funding under these programs to include operating costs under the Rural Transit Solutions program and funding for publicly managed municipal bike-share programs under the Active Transportation Fund. The Zero-Emissions Transit Fund will be incorporated into the Canada Public Transit Fund as additional support for municipalities to meet rising minimum zero-emission bus procurement targets.
