As Canada’s most populated province, Ontario is responsible for a significant portion of Canadian poverty. Unfortunately, government actions over the last number of years have been insufficient in fighting poverty and have made matters worse in some cases. Ontario has a large working-class population struggling with poverty. Moreover, the housing crisis and challenges faced by those living with a disability are major issues in poverty reduction.

Housing and the Cost of Living

The most often discussed drivers for poverty in Ontario are housing affordability and the high costs of living. Home ownership costs in Ontario are the nation’s second highest. More importantly, as 70% of food bank users are renters, the cost of rent provides a better indication of those who struggle with affordability.

On average, one-bedroom rentals in the province are the highest in the country at almost $2,200 a month. Three-bedroom units are second highest at roughly $3,000 a month. Altogether, 1 in 4 people living in the province have difficulties finding affordable housing and nearly 2 in 5 are paying more than 30% of their income on housing.

In terms of the cost of living in Ontario, many low-income individuals are spending well above half their income on fixed costs outside of housing. Far more people in Ontario are reporting that they cannot access necessary healthcare due to affordability issues. The issue of affordability seems to be worsening as 43% of Ontarians say they’re financially worse off than one year ago.

Solutions to Social Security

Better employment opportunities and policies to promote decent work would help to ease the difficulties of people living in Ontario. Unfortunately, people who receive social assistance and are looking to re-enter the workforce are effectively punished because their benefits are clawed back aggressively for each dollar earned. In addition, Ontario has some of the lowest social assistance rates in the country: 34% of the poverty line for single working-age adults. In other words, while individuals are legislated to poverty under the province’s social assistance plan, the challenge of finding adequate work is made more difficult than it already is.

Sociodemographic Considerations

Ontario is one of the three provinces with a large enough sample size to report on racialized communities in our survey.

Racialized people in Ontario face many challenges that the rest of the province does not. Data from our survey suggests there are two particular areas where this group experiences increased challenges: work and housing.

Low wages are affecting 37% of those within racialized communities from making ends meet, compared to 30% across the province. Making the issue worse is that 39% of racialized Ontarians also have difficulty accessing stable employment in their community, which is a full 10% higher than the provincial average. Beyond these challenges in the job market, 41% of racialized respondents also stated that their mental health is affecting their ability to find work, work effectively, or maintain finances.

With these challenges, it’s not surprising to discover that those within racialized communities are far more likely to struggle with housing related issues. Overall, 34% of respondents in this group agreed that it is hard to find adequate housing, which is almost 10% more than the provincial average. For those who find housing, 41% agree that it is hard for them to keep up with rising rents (+7 percentage points from provincial average).  As such, 30% of them are spending 30% to 50% of their income on housing, which is 7 percentage points higher than the provincial average.

Table 1. Welfare incomes in Ontario, 2018–2022, constant dollars (2022)^[2]

• Encouraging more municipal infrastructure development to help enable the development and preparation of housing sites. The recent Ontario budget allocated up to $1.8 billion to help municipalities finance this infrastructure. 
• Lowering the cost of building affordable housing, in part by reducing the development charges associated with these projects by 25 per cent. 
• Implementing governance reforms so cities can more easily and quickly implement changes to housing supply policies. 
• Creating the Ontario Infrastructure Bank to help encourage more investment in transit, roads, and housing. 
• Introducing a provincial version of the federal Housing Accelerator Fund to help reward cities with plans to increase housing supply. This partially addresses one of our recommendations from last year, but we recommended a more specific focus on affordable housing. Making changes to the permitting process for secondary suites. 
• Removing the provincial portion of HST on qualifying new purpose-built rental housing, which mirrors federal action. 

• • Affordable housing;

• • The presence of deep poverty in the province, and;

• • The lack of knowledge about tax information and benefits available to residents.

Moreover, experts maintain that policymakers must prioritize vulnerable groups such as young people and the working poor.

The 2023 budget from Ontario failed to address poverty reduction and the soaring cost of living across the province. Despite being among the most expensive provinces to live in, the budget does little to help individuals and families struggling to make ends meet. Some minor commitments worth noting are investments in the Homelessness Prevention Program and Indigenous Supportive Housing Program. While an investment to support community-based mental health and addiction services is included in the budget it is limited to service providers funded by the Ministry of Health.

In 2023, Ontario will need to continue helping low-income workers through more robust programing. This approach matches the government’s general direction so far and directly addresses those who have expressed concerns with decent work. Beyond this, the government must take steps to show that they are taking the housing affordability crisis seriously, and beyond that, the poverty crisis.

Accountability

Ontario lacks a clear objective for measuring overall success in reducing the number of residents who are living in poverty. While the province’s current strategy includes metrics to increase employment and reduce social assistance caseloads, these do not guarantee any level of success with respect to overall poverty reduction.

Decent Work that Pays

Since its introduction in 2018, LIFT and the recently enhanced CWB have provided substantial additional support to eligible workers who are transitioning into low-wage or part-time employment. To bolster these incentives, the province should use recent fiscal windfalls from the strong post-COVID-19 labour market recovery to double LIFT to $1,700, with a focus on helping workers who are earning less than $50,000 in particular. To simplify and improve access to supports, the Ontario government should also work with the federal government to harmonize program design. The CWB, for example, focuses primarily on employment source income (as does LIFT) rather than adjusted net income so that the two benefits are fully stackable. Harmonizing the program design would ensure that someone who is employed for 20 hours a week or less and is earning minimum wage would be able to benefit fully, with nearly $3,300 annually in combined and unreduced support.

In anticipation of the significant impact that the forthcoming Canada Disability Benefit will have on Canada’s social safety net, the government of Ontario should undertake a similar review of provincial benefits to enhance both their adequacy and the simplicity of the application process so that they provide livable support that encourages people to look for and stay in work.

While the province recently made welcome changes to increase the amount that a recipient of ODSP can keep if they find work—from $200 to $1,000 per month—any earnings above this level are still clawed back at a rate of 75 per cent. At a minimum, the province should reduce this clawback provision to 50 per cent, which would align with the current earnings exemption rule in the Ontario Works program. This would improve the ability of and incentive for people who receive ODSP to seek and find work if they are able to do so.

Affordable Housing

While Ontario has established a provincial housing accelerator fund, this action only partially addresses our related recommendation from last year. Ontario needs to focus the Building Faster Fund on deeper housing affordability that addresses the needs of people who are classed as lower-income and working- poor. Private market developers are struggling to keep up with rising demand, as increased interest rates have affected financing options. Changing the focus of the Building Faster Fund would build on the savings gained from the removal of provincial GST on new purpose-built rental construction. For example, it could include establishing a time-limited, enhanced capital cost allowance class for purpose-built rental units so that developers can recoup their capital investment faster. In exchange, Ontario would set strong conditions to increase the mix of affordable and below-market units and deepen affordability. This could be paired with further grant investments to assist with land acquisition.

If Ontarians are to have affordable housing, the province’s non-profit and co-operative housing providers must be able to acquire land and property—often the most important cost in development—cheaply and quickly. The province’s More Homes Built Faster strategy facilitated initial steps in this direction by exempting affordable housing projects from development charges. This urgently needs to be supplmented by the province with funding and land so that projects can proceed. We recommend that an acquisition and development stream of at least $800 million be dedicated to affordable housing providers. British Columbia’s Community Housing Fund Program, a $3.3 billion investment to create 20,000 affordable homes, could be used as a template for a similar program in Ontario.

Ontario cities are sitting on significant reserves and cash that could be used to build affordable housing. In 2022, Ontario municipalities had $2 billion more in cash on hand than they did before the pandemic, with development charge reserves big enough for Toronto and Ottawa to spend down for years without needing to collect any new revenue. Even with the recent reduction in development charges for affordable housing, there is still significant room for additional investment. The province should direct municipalities to present a plan to deploy excess reserves over a period of five years by either further reducing development charges on affordable housing or directly co-investing the reserves into affordable housing projects or related health and human services that help ensure the most vulnerable residents are successfully housed.