Federal Government Bypasses Ontario Amid Dispute Over $357M for Affordable Housing Resolution

The federal government plans to exclude Ontario from a housing fund of hundreds of millions of dollars following a prolonged period of public disagreement over its allocation and allegations of the province’s inadequate construction efforts.

In early May, Federal Housing Minister Sean Fraser informed Ontario’s Housing Minister Paul Calandra that the anticipated $357 million for affordable housing projects would not be allocated to the province.

Instead, the federal government will directly allocate the funds to local service managers. Consequently, Ontario will not receive reimbursement for previously expended funds and will have diminished authority over project selection and execution.”

“The federal government has made every effort to reach an agreement with Ontario,” Fraser wrote.

“I am disappointed that through your rejection of the conditional approval you have decided to forego the federal funding that would reimburse Ontario for investments it makes under our agreement.”

Calandra expressed no objection to Ottawa directly engaging with the service managers responsible for affordable housing in Ontario. He informed reporters that he had communicated this stance to Fraser previously.

“They’ve decided to unilaterally withhold $357 million because they disagreed with us on how we should distribute that money,” Calandra said during question period Monday.

“For weeks, we’ve been saying, ‘It is distributed through our service managers.’ Now, the big, bad federal Minister of Housing is going to punish Ontario. Do you know how? By distributing the money the same way we have done it for the last 35 years: through our service managers.”

Fraser’s decision potentially signals the conclusion of a dispute between the two parties that commenced in mid-March.

The matter came to public attention when Fraser penned a letter to Calandra, alleging that Ontario had not fulfilled its expenditure obligations outlined in the 2018 bilateral agreement known as the National Housing Strategy.

Fraser asserted that Ontario significantly trailed behind other Canadian regions and expressed doubt regarding the province’s ability to fulfill the commitments made upon receiving the funds. He noted that his request to review Ontario’s plans to achieve a target of 19,660 new affordable homes by 2028 was denied by the province.

“Because Ontario is lagging far behind its provincial and territorial counterparts when it comes to building more affordable housing units, I believe the request to see details on Ontario’s plan was reasonable,” Fraser wrote in his May 1 letter.

In contrast, Calandra asserted that Ontario had fulfilled its obligations but emphasized the necessity of allocating a substantial portion of its funds toward renovating existing units. He highlighted that despite maintaining housing stock within the system, Ottawa declined to recognize these renovations as progress.

Despite the earlier threat of withholding funds, the federal government has chosen to bypass the province entirely, directing the $357 million directly to service managers.

Addressing reporters at Queen’s Park on Monday, Calandra remarked that he had been informed by the federal government “for weeks” of their disagreement with the provincial plan before ultimately opting to fund service managers directly.

“I want to assure you that the full amount of this funding which was meant to flow through the Province will nevertheless be used to make investments in affordable housing and housing supports for the most vulnerable in Ontario, and will be delivered directly by the federal government,” Fraser wrote in a May 1 letter to service managers in Ontario.

“I fully expect that the federal government, now having agreed with us that this is the best way to do it will provide Ontario with $357 million… and then we can continue on doing the really good work that we’ve accomplished with the National Housing Strategy,” Calandra said to reporters.