Ontario Moves To Reduce Barriers To Infrastructure Development With Proposed Repeal Of Section 28 Of The Financial Administration Act

What is section 28 of the Financial Administration Act (Ontario)?

Section 28 of the Financial Administration Act (Ontario) (the “FAA”) requires approval from the Minister of Finance or the Ontario Financing Authority, acting as the Minister’s agent¹ before the Crown can enter into financial arrangements, commitments or transactions that directly or indirectly increase Ontario’s indebtedness or contingent liabilities, unless an exemption applies. Put simply, section 28 approval is required where an agreement would expose the Province to contingent liabilities.

At a high level, section 28 is designed to protect the Province from unknown, unintended or potentially onerous future financial obligations.

Impacts on Infrastructure Projects

Major infrastructure and public-private partnership (“P3”) projects are complex transactions that inevitably include contingent liabilities. Accordingly, section 28 approval has historically been required in order for government/public contracting authorities to enter into the transaction agreement pursuant to which an infrastructure asset is delivered. However, the procurement process pursuant to which the contractor is selected, and the transaction agreement negotiated, is a long process usually spanning many months, if not years. Accordingly, by the time the transaction agreement is settled for execution, both the contracting authority and the contractor have invested significant time and money into the process. They must then wait for section 28 approval before they can close the transaction, and in some cases the clock is ticking down on the bid validity period under a procurement process (i.e. the deadline by which the agreement must be signed). Approval is neither certain, nor is a decision required within a specified timeline. As such, section 28 is often seen as a source of transaction risk.

Proposed Amendment

Section 4 of Schedule 5 to the Plan to Protect Ontario Act (Budget Measures), 2026 proposes to repeal section 28 of the FAA in its entirety.² The amendment provides that section 28 will continue to apply to any agreements, commitments, or transactions entered into before the repeal comes into effect. As of the date of publication of this note, the proposed repeal is not yet in force.

While it may be the case that, prior to the new law coming into force the Province will introduce a different regime to monitor contingent liabilities, the repeal of Section 28 is likely to be welcomed by infrastructure market participants, including sponsors, lenders, contractors, service providers, and public-sector counterparties. It would reduce approval-related uncertainty, improve the predictability of closing timelines and allow public authorities to more quickly and effectively respond to commercial issues with less risk to closing deadlines. Ultimately, the repeal of section 28 reduces red tape and helps get projects built faster.

If you have questions about the impact of the proposed repeal of section 28 on infrastructure and P3 projects in Ontario, please reach out to the authors.

Footnotes

1 Section 16.6(5) of the Financial Administration Act, R.S.0. 1990, c. F.12.

2 Legislative Assembly of Ontario, Bill 97, Plan to Protect Ontario Act (Budget Measures), 2026, online: https://www.ola.org/en/legislative-business/bills/parliament-44/session-1/bill-97.

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