Building the Future in a "Ruptured" World: 7 Key Takeaways on Canada’s 2026 Infrastructure Priorities

On January 22, 2026, McCarthy Tétrault was pleased to host our annual panel event, The Inside Scoop: What is Government Thinking about Infrastructure.

Now in its third year, our panelists discussed current federal, provincial and municipal government infrastructure priorities across the country, and provided their insights on the major factors currently impacting infrastructure delivery in Canada, and how market participants can succeed and manage risks in the current political environment.

Julie Parla (Co-Chair of our National Infrastructure Group) served as moderator. With the exception of Andrea van Vugt from Wellington Strategy, who could not attend due to inclement weather, our panelists from last year’s event were reunited. The discussion featured:

• Jan O’Driscoll, Partner at Rubicon Strategy;
• Awanish Sinha, Toronto Litigation Partner and Co-Leader of McCarthy Tétrault’s Public Sector Group; and,
• Brad Nicpon, Partner in McCarthy Tétrault’s Toronto Infrastructure & Projects Group

Key Takeaways

1. Geopolitical Factors Impacting Infrastructure

Perhaps the most significant political trend of the past year has been the shift in American foreign policy away from international trade and historical economic alliances toward protectionism. Last week, at the World Economic Forum in Davos, Prime Minister Mark Carney characterized this change in American policy as a “rupture” in the world order.

This geopolitical realignment is having a significant impact on government infrastructure priorities across the country. Two years ago, governments were focused on housing supply, public transit, healthcare, renewable energy and climate change. In many cases, these priorities were driven by the big issues-of-the day – inflation, cost of living and affordability.

Today we have seen a dramatic shift in priorities towards national security, energy independence, military investment, and job creation in industries threatened by changing trade relationships.

2. Strengthening Interprovincial Cooperation

Some Provinces now view the primary motivating factor behind their infrastructure policy as "national survival". A major component of this approach is promoting collaboration among the Provinces, as well as between the Provinces and the federal government. Our panelists expect we will see a significant increase in interprovincial infrastructure projects, such as the Ksi Lisims LNG pipeline and the Alto High-Speed Rail network as governments remove trade barriers between them and work toward shared national objectives.

3. Federal Project Mobilization and the Major Projects Office

In an era in which many Canadians feel that their national sovereignty is under threat, the panelists noted that infrastructure is being positioned as a unifying, national force. The creation of the Major Projects Office (the “MPO”) signals a strong commitment from the federal government to accelerate essential, large-scale and generational infrastructure in Canada. When asked to speculate on projects most likely to be adopted by the MPO, the panel highlighted that projects that align with government priorities such as job creation, economic growth and national security are likely to see success.

4. Government Risk Aversion and a New Tipping Point

When asked what risks the MPO faces in its bid to accelerate infrastructure projects of national significance, our panel identified institutionalized risk aversion as perhaps the greatest risk. Accelerating projects can mean making hard (and sometimes risky) decisions about how to approach environmental regulations, permitting, funding and relationships with First Nations communities. If things go wrong, governments get blamed, and as our panel put it, no politician wants to be blamed for project failures. Moreover, civil servants are mandated to ensure taxpayers get value for money and that public goods and the public realm are protected. Governments are likely to encounter some level of institutional resistance from their own ministers in accepting the risks associated with accelerating projects.

Historically, such institutional resistance may have derailed attempts to accelerate projects; however, the panel observed that a potential "tipping point" may have been reached whereunder the domestic and geopolitical risks associated with inaction and project delays now outweigh the risks of project acceleration.

Infrastructure agencies, such as the MPO, are looking to mitigate project risks as much as possible. Our panel encouraged market participants to collaborate with governments in order to achieve this goal. They recommended that relationships should be prioritized – for example, market participants should engage with government, First Nations communities and other key stakeholders early and often throughout the project lifecycle to prevent delays and ensure long-term project alignment.

5. Critical Minerals and Rare Earth Elements (REEs)

Critical minerals and REEs reemerged again this year as a key topic of discussion. Our panelists agreed that provincial and federal governments recognize the strategic importance of critical minerals and REEs to Canada’s economic prosperity, clean energy goals, national security and the development of advanced technologies including AI, EVs and data centers. Here in Ontario, the Building Ontario Fund has been given an express mandate to invest in projects that promote the development of the Ring of Fire.

6. Infrastructure as National Security: The Defense Investment Agency, Defense Spending and Arctic Sovereignty  

Rising political tension in the Arctic has accelerated the demand for national defense infrastructure. In October, the federal government announced the establishment of the Defense Investment Agency (the “DIA”). Backed by a $6.6 billion investment over five years, the DIA aims to accelerate procurement and strengthen defensive infrastructure nationally. Our panelists predict that, given national security concerns, the DIA will prioritize Canadian firms in its procurement processes. Beyond opportunities for Canadian firms to develop defense-specific infrastructure directly with the DIA, our panelists highlighted that defense infrastructure in more remote, Northern regions may drive significant "spillover" and supportive infrastructure projects such as roads, wastewater systems and power grids.

7. Energy Grid Modernization and AI Demand

Data from the Independent Electricity System Operator (the “IESO”) indicates that electricity demand in Ontario has reached record highs, a trend expected to continue as AI data centers and EVs become further integrated into the economy. The panel highlighted an urgent need for infrastructure that supports both energy capacity, such as the Bruce C Nuclear Project and small modular reactor (SMR) projects, as well as vast transmission networks required for delivery. Our panelists predict that Ontario will continue to prioritize a diverse energy mix of renewables and non-renewables. This policy may entice American companies specializing in renewable power development to invest North of the border as an alternative to an increasingly hostile U.S. regulatory environment.

8. Housing Developments and Shifting Priorities

While the federal government continues to advance housing through its Build Canada Homes agency, the panelists agreed that domestic housing policy is increasingly competing for funding and political attention as trade and national security priorities begin to take center stage. Additionally, significant market corrections in Ontario and British Columbia have contributed to a slowdown in private investment and residential development, necessitating a strategic reassessment of project timelines. In addition to other measures, our Panelists expect federal and provincial governments to collaborate with developers on innovative construction solutions to ensure housing development gets back on track.

Your Strategic Infrastructure Partner

Our full-service team at McCarthy Tétrault is at the forefront of infrastructure development and government policy in Canada. Leveraging our extensive experience in procurement, permitting and funding, we help our clients navigate the legal and business complexities associated with large-scale infrastructure projects. If you have questions about a project, we are here to support you as your trusted advisor.

For further inquiries, please reach out to Brad Nicpon or Awanish Sinha.