The federal government is set to sideline Ontario from a housing fund worth hundreds of millions of dollars after more than a month of public tensions over how it is spent and accusations the province is failing to build.
At the beginning of May, federal Housing Minister Sean Fraser told his Ontario counterpart Paul Calandra that he would not send the province $357 million it was expecting for affordable housing projects.
The feds will go straight to local service managers with the money instead. That change means Ontario won’t be refunded for money it has already spent and will have less control over what is built.
“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 said he had no problem with Ottawa going straight to the service managers who provide affordable housing in Ontario and told reporters he had said as much to Fraser.
“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 marks the end of a feud between the two that has been going on since the middle of March.
The issue became public when Fraser wrote to Calandra, accusing Ontario of failing to meet its obligations for how it spent money under a 2018 bilateral agreement called the National Housing Strategy.
He said the province lagged far behind other places in Canada and wouldn’t be able to meet the promises it had made when it signed up for the money. Fraser said he asked to see how Ontario would meet a target of 19,660 new affordable houses by 2028, a request he said was denied.
“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.
Calandra, on the other hand, said Ontario had kept its end of the bargain but needed to spend a significant sum of its money on renovating old units. He said Ottawa had refused to count them as progress despite keeping stock in the system.
Despite threatening to withhold the money, the federal government has opted to simply bypass the province and hand the $357 million directly to service managers.
“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.
Speaking at Queen’s Park on Monday, Calandra said he had been told “for weeks” by the federal government they didn’t agree with the plan before they decided to fund service managers directly.
“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.