Ontario, federal government reach $357-million housing agreement after months of dispute

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The federal government and Ontario have reached a housing agreement that will provide the province with $357-million in federal funding this year, ending a months-long disagreement that saw Ottawa threaten to bypass Queen’s Park and send money directly to municipalities.

The deal was hammered out by federal Housing Minister Sean Fraser and Ontario Minister of Municipal Affairs and Housing Paul Calandra, who met in Ottawa last week, and puts an end to the argument that Ontario wasn’t on track to build enough affordable housing units.

The dispute stemmed from the province’s plan to meet its target of 19,660 new rent-assisted social housing units by 2028, part of a $5.8-billion transfer agreement with the federal government. Ottawa has said Ontario lags far behind its provincial and territorial counterparts when it comes to building more affordable housing and was refusing to share more details of its plan.

But Ontario had argued that the federal government refused to acknowledge the number of units it has built and the tens of thousands it has refurbished, adding that the province has the oldest social-housing stock in the country.

Last month, the federal government said it would bypass the province and send the money directly to Ontario’s 47 service managers, which include regional governments and administrative boards that operate social housing and homelessness plans.

In a joint statement released Tuesday, Mr. Fraser and Mr. Calandra said the two governments recognize that their “collaboration is imperative to solving the housing crisis” and would pursue a “Team Canada” approach.

Mr. Fraser told reporters in Ottawa that Ontario’s initial plan didn’t meet the necessary targets to unlock the funding but that the new agreement “puts them on par with most other provinces as to where they’re at right now.”

“This puts Ontario in a place where they’re going to be able to achieve the obligations that they agreed to at the outset,” he said.

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Speaking to reporters at Queen’s Park, Mr. Calandra said it’s “no surprise” that Ottawa and his province have been in a disagreement over Ontario’s numbers. He said Ontario funds affordable housing differently than other provinces and that he was able to explain to his federal counterpart how the system works. In return, he said, Ontario will improve how it collects its data.

“I’m glad they fully understand what Ontario has accomplished in terms of getting affordable housing built,” he said, adding that there has been “extraordinary progress” on renovated units as well.

The Association of Municipalities of Ontario, a non-profit organization representing municipal and regional governments, welcomed the news of an agreement but called for stronger relationships between all three levels of government “to fundamentally re-think the way that community housing is funded in Ontario.”

“The uncertainty that recent events generated for low income individuals and families, as well as municipalities making long-term investments, is destabilizing for those with limited options,” AMO president Colin Best said in a statement.

In its joint statement, the Ontario and federal governments said the province has submitted a new “action plan” that provides more data and insights about which housing projects receive provincial funding. The province also included new measures to reflect how Ontario’s funding is delivered, since it is the only jurisdiction that distributes funds through municipal service managers.

Ontario also pledged to submit an action plan for 2025-28 by the end of this year in order to continue to receive federal funding under the 10-year national housing strategy agreement.

Ontario’s revised 2022-25 action plan forecasts adding at least 8,644 units toward its expansion target by March 31, 2025. The plan also identifies new measures that will put the province on the path to meet the overall target of 19,660 new affordable units by the end of the agreement.

The federal government has previously bypassed provinces to deal directly with municipalities when it comes to funding for housing.

Ottawa has already been signing agreements with municipalities through its Housing Accelerator Fund. It has also threatened to circumvent provinces with its new $6-billion housing infrastructure fund, announced in April’s federal budget, which would require provinces to agree to a list of conditions such as increased density to access the money.