In 2003, Paul Martin succeeded Chrétien as Liberal leader and prime minister. Following the subsequent 2004 election, Godfrey, among other key Martin allies, was appointed to the Cabinet in the role of Minister of State for Infrastructure and Communities. In this role, he was primarily responsible for overseeing the "New Deal for Cities", Federation of Canadian Municipalities relationship, and other initiatives in Canadian federal-municipal relations. This role was considered a keystone of Martin's industrial strategy. According to Auditor General of CanadaSheila Fraser, Canada lags far behind the US and UK in municipal performance audits for government, in applying its own statements to procurement, and in direct federal standards applying to municipal operations. Godfrey was tasked with dealing with these substantial problems, a role complicated by the fact that, constitutionally, provinces in Canada have formal jurisdiction over cities and municipalities, and have blocked most necessary changes in funding and operations. This is markedly different from in the US where the General Accounting Office has applied specific accounting standards, and the Federal Emergency Management Agency has required specific upgrades to city emergency responses. As in major American cities, federal support of a municipal emergency response is a problem of particular concern in Godfrey's home city of Toronto, following the SARS outbreak, the August 2003 blackout and smog and snow crises. Toronto is also considered to be the primary target for any asymmetric warfare/terrorist attack on Canada. As an additional complexity, Canadian cities faced with gridlock and smog problems due to commuting and urban sprawl, now face Kyoto Accord requirements to cut greenhouse gas output. To deal with these problems, on a national level, Godfrey was directly involved in negotiations regarding climate change auditing and other municipal performance indicators that would apply at least to cities in Canada, and eventually to all municipalities.
Liberal leadership
On February 3, 2006, CBC Newsworld's Don Newman announced on air that Godfrey was planning a run for the Liberal Party leadership. Godfrey declared his candidacy on Goldhawk Live on March 19, shortly after the rules and convention date were set. Media reaction was positive, but competed with coverage of Ashley MacIsaac, who declared his intention to run to the Halifax Daily News the next day. In the early stages of the campaign he was recurrently cited as exemplar of intellectualism in the race, being one of three former university professors in the running. Name-recognition remained a challenge, but Godfrey received plaudits in the Canadian blogosphere for his performance in the first all-candidates meeting at the Liberal Party of Alberta convention on April 8. On April 12, 2006, Godfrey announced his withdrawal from the race, due to concerns about his health. On October 20, 2006, Godfrey announced his support for Bob Rae for the federal Liberal leadership. He made the announcement at the National Press Club, on the occasion of a speech by Rae on the environment.
Leaving politics
Godfrey announced in November 2007, that he would be resigning his seat in parliament on July 1, 2008 and would leave earlier if an election were called before that date. He subsequently delayed his resignation date until August 1. The Conservative Party alleged that the Liberals chose to delay the by-election for financial reasons though Godfrey's office stated that the delay was due to a private members bill Godfrey had worked on not being given Royal Assent until June 26. On June 17, in a point of order following Question Period, Godfrey gave his resignation speech to the House of Commons.
John Godfrey left politics to become Headmaster of the Toronto French School, a prestigious independent school in the Lawrence Park area with two campuses in Toronto. He held the position from 2008 until resigning in June 2014.
