Feds double down on funding threat as Ontario struggles to build new affordable housing

The Justin Trudeau government is standing firm on its threat to withhold funding from the Ontario government due to a lack of planned affordable housing.

“I don't think it is responsible for me to transfer funding for the purpose of home building, for homes that are never going to be built,” Housing Minister Sean Fraser told reporters at a news conference Wednesday.

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His comments are the latest in a war of words with his provincial counterpart over $357 million in funding earmarked for affordable units.

In 2018, the previous Liberal Ontario government signed a 10-year bilateral deal pledging to deliver 19,660 affordable housing units.

In a letter sent to Ontario Housing Minister Paul Calandra last week, Fraser said the province’s tally is significantly lower, standing at about 1,184 new units by the end of 2024-2025.

“Ontario is lagging desperately behind all other provinces and territories,” Fraser wrote on March 21. “This leaves 94 per cent of the target to be achieved during the last three years of the agreement, which is not realistic.”

Since then, Fraser said the province has updated its housing plan to reach 28 per cent of its goal. However, that number is still too low, he said.

“Typically, governments across Canada have achieved about two-thirds of the total funding,” he said of Ontario’s progress. “If there is not a clear path for the Government of Ontario to satisfy the entirety of the commitment that they had agreed to with eyes wide open, and they should not expect to receive the full amount of money.”

Calandra has argued the province is working to repair and renovate affordable units in addition to building them, noting the province has one of the oldest housing stocks in the country.

If those units were counted, he added, Ontario would hit nearly 60 per cent of its goal.

“We remain willing to be at the table but our position is not going to change,” he said. “They are changing the yardsticks every single day and it’s starting to get frustrating.”

The Association of Municipalities of Ontario (AMO) sided with Calandra and argued that withholding this funding “would have devastating impacts on low-income families and individuals” while also further exacerbating the housing crisis.

“Ultimately, we need to fundamentally re-think the way we fund community housing in Ontario and in Canada. But the answer is not unexpected funding cuts in the middle of a homelessness crisis,” they wrote in a letter to Fraser Tuesday.

The federal minister, for his part, confirmed the money will be used to build affordable housing in Ontario—it just may not be provided through the provincial government.

It's important to note that the Ford government has been using a similar tactic for its Building Faster Fund to encourage development, withholding funding from municipalities who have not met their goals.

The City of Mississauga lost out on about $30 million because it did not have enough housing starts for 2023, despite local officials arguing they had permits awaiting approval.