The Justin Trudeau government is threatening to withhold Ontario's funding allocated for affordable housing, claiming that there has been almost no progress in the province.

In a letter sent on March 21, Housing Minister Sean Fraser wrote that Ontario pledged to deliver 19,660 affordable housing units as part of a 10-year bilateral deal signed in 2018.

Currently, Ontario is expected to have 1,184 new units by the end of 2024-2025.

Fraser wrote to his regional counterpart, Ontario Housing Minister Paul Calandra, "This leaves 94 percent of the target to be achieved in the last three years of the agreement, which is unrealistic."

"Ontario is severely lagging behind all other provinces and territories, and the lack of progress jeopardizes the completion of housing goals in Ontario and Canada's national target.

Fraser pointed out that unless Ontario submits a revised plan outlining how it intends to meet its targets, it will not receive the promised $357 million in funding from the federal government.

Fraser said, "As you know, the current deadline already includes a one-year extension, and no further extensions are possible.”

He added, "Officials in my office have extended the deadline for the resubmitted action plan several times. If Ontario fails to submit a revised plan by the end of March 22 – allowing us time to analyze and respond by the final deadline of March 31 – the bilateral funding will end, and the impact on Ontario residents in need of housing will be devastating."

Calandra described the government's decision to withhold funding as “unacceptable,” and in a private letter he stated: “Ontario respectfully expects to be treated by the federal government as a genuine and equal partner.”

He noted that the goals do not take into account the current economic landscape nor the work of maintaining, repairing, and renewing units. He said Ontario has one of the oldest housing stocks in the country, and if those units were counted, the province would reach nearly 60 percent of its target.

He said if they did not invest in repairs, it "would be considered gross negligence."

"While increasing stock is important, it is equally, if not more important, to ensure it does not shrink due to units that cannot be sustained on the market because of deferred repairs and renovations."

The Ford government had been using the same tactic with the "Build Faster" fund to encourage development, withholding funding from municipalities that failed to meet their targets.

Mississauga lost about $30 million because it did not have enough housing starts in 2023. Local officials pointed out that they have more permits waiting for approval than housing waiting for approval, but the province refused to allow these figures to count toward Mississauga's target.

Calandra said at the time: "We want to get people moving into homes, and as I said, a permit does not mean they are moving into a home."