Feds, province fight over affordable housing with over $357M at stake

Editor's note: This article originally appeared on The Trillium, a Village Media website devoted exclusively to covering provincial politics at Queen’s Park.

The federal and provincial governments remain locked in a battle over $357 million in affordable housing funding as the deadline to disperse the money looms. 

Federal Housing Minister Sean Fraser said the Ford government isn’t making enough progress on building nearly 20,000 units of affordable housing and hasn’t outlined a credible path to meeting those targets. 

On Wednesday, Fraser said the province provided a revised plan that gets to about 28 per cent of the goal, up from a previous plan that only got six per cent of the way there. 

Fraser didn't rule out still doling out funding based on conversations set to happen this weekend, but reiterated his previous position. 

"We're going to finalize our assessment of the plan over the next couple of days," he said. "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 — then they should not expect to receive the full amount of money," he said. 

"I don't think it's responsible for me to transfer funding for the purpose of homebuilding for homes that are never going to be done," Fraser added. 

Ontario Housing Minister Paul Calandra contends Ottawa is being unreasonable and threatening “punitive” measures that could put vulnerable people at risk. 

“We remain willing to be at the table but our position is not going to change. I’m not going to change laws. I’m not going to change decades worth of how we provide this type of housing,” Calandra said at the legislature on Wednesday, shortly before Fraser’s press conference. 

Last week, Fraser wrote to Calandra warning that if the province failed to revise its plan to demonstrate how it’ll meet its affordable housing targets under the 10-year National Housing Strategy bilateral agreement, funding would be withheld. 

The province hasn’t made any meaningful progress on building new affordable housing units, Fraser said. 

The $5.8-billion bilateral agreement, which runs from 2018 to 2028, commits the province to construct 19,660 new units by the end of 2024-25, but just 1,184 have been built, Fraser said. 

“This leaves 94 per cent of the target to be achieved during the last three years of the agreement, which is not realistic,” Fraser wrote. “Ontario is lagging desperately behind all other provinces and territories. The lack of progress jeopardizes the completion of both Ontario’s housing targets, and Canada’s national target.”

In response, Calandra said withholding funding “would simply be a punitive measure that will benefit no one.” 

If Ottawa were to count affordable units built with money from other programs, “Ontario’s progress hits nearly 60 per cent of the 19,660 number,” Calandra said. 

Fraser’s position also didn’t consider “some major factors that should be taken into account,” Calandra said. 

Since the agreement was signed in 2018, “the economic landscape has shifted drastically with the rising costs of building materials, supply chain disruptions, gaps in the labour market, and most of all, higher interest rates.” 

Ontario’s social housing stock is also the oldest in the country, Calandra said, which is why his government has prioritized repairs over building new units. Focusing on building new stock at the expense of existing units “would amount to gross negligence on our part.” 

Asking for a new plan for this year while Ontario’s 47 service managers, which are responsible for managing much of Ontario’s affordable housing, are well into their financial planning cycles would be an “extremely difficult task.” A better approach, Calandra said, would be to focus on the 2027-28 fiscal year. 

In a separate letter, Calandra warned the service managers that “there may be a significant impact in funding starting on April 1.”

Finally, Calandra said the funding formula shortchanges Ontario because it’s based on population, not need. 

“Ontario also has by far the highest share of households in core housing need relative to other provinces and territories. At 44 per cent, our core housing need is well above our population share of 38.5 per cent. This difference translates into approximately $390 million that Ontario could have received” under the life of the agreement.

“They knew that this was how we delivered housing when the agreement was signed with the previous Liberal government in 2018. So this is not a surprise. They're changing the yardsticks every single day and it's starting to get a bit frustrating,” Calandra told reporters. 

Fraser told Calandra to resubmit a new action plan covering 2022 to 2025 by March 22 — giving the feds until March 31 to respond — otherwise funding will lapse. 

Calandra sent in a new plan and Fraser is still reviewing it, a federal spokesperson said. Fraser’s office contends no decision has yet been made on withholding or doling out funding, which is contingent on their review. 

The Association of Municipalities of Ontario (AMO) jumped into the fray on Wednesday by sending a letter to Fraser supporting Calandra’s position. 

“I am writing today on behalf of Ontario’s municipalities to urge against any cuts to federal funding for affordable housing,” AMO president Colin Best wrote. “This would have devastating impacts on low-income families and individuals, and further exacerbate the housing crisis across the province.”