Question Period Note: MAIN ESTIMATES - DEPARTMENTAL BUDGET 2020-2021

• Veterans Affairs Main Estimates reflect this government’s continued commitment to Veterans to restore critical access to services and improve the long-term financial security and independence of ill and injured Veterans and their families.
• Over 90% of the Department’s budget represents payments to Veterans, their families and other program recipients.
• Increases to Veterans Affairs Canada’s budget reflect the historic steps we have taken to ensure Canadian Veterans and their families are treated with care, compassion and respect.

BACKGROUND – MAIN ESTIMATES – DEPARTMENTAL BUDGET 2020-2021

Veterans Affairs Canada’s planned spending each year is established through the Main Estimates and Supplementary Estimates.

Main Estimates 2020-21
• Main Estimates provides a detailed listing of the resources required by Veterans Affairs Canada for the upcoming fiscal year in order to deliver its programs.
• The 2020-21 Main Estimates provide Veterans Affairs Canada funding of $5.24 billion, which represents a net increase of $817.7 million (or 19%) in comparison to last year’s Main Estimates (2019-20).

Summary of key changes:
• $33.7 million increase in Vote 1 (Operating) primarily related to adjustments in:
o Regular Operating – $30.9M decrease due to the conclusion of temporary funding in 2019-20 for both Service Excellence and the implementation of Pension for Life;
o Other Health Purchased Services – $67.8M increase, due to increased demand for health services for clients;
o Veterans Support Services – $3.6M increase, due to increased demand for rehabilitation and support services for clients;
o Advertising initiatives – $2.2M decrease, as funding concludes after fiscal year 2019-20;
o Budget 2017 Outreach Strategy – $3.5M decrease (2020-21 is the final year for the fund); and
o Ste. Anne’s Hospital – $1.3M decrease, due to a decrease in funding requirements.

• $864 million increase in Vote 5 (Grants and Contributions) primarily related to adjustments in:
o Disability Pensions ($86M increase) – Temporary funding received to correct the indexation of disability pension, which is offset by a decrease due to a decline in the number of War Service Veterans and Survivors.

o Due to the transition of Pension for Life suite of programs, the following programs are being adjusted:
Increases due to PFL Implementation
 Pain and Suffering Compensation - $616M Increase
 Income Replacement Benefit - $240M Increase
 Additional Pain and Suffering Compensation - $54M Increase (Replaces Career Impact Allowance)
Decreases due to sun-setting Veterans Well-being Programs
 Disability Awards - $104M decrease (Phasing out the Disability Award program as a result of the new Pain and Suffering Compensation
 Supplementary Retirement Benefit Payout - $53M decrease (Phasing out the Supplementary Requirement Benefit program as a result of the new Income Replacement Benefit)

• $4M decrease in Statutory items primary related to adjustments in:
o Employee Benefit Plan Contributions – Decreasing salary due to the conclusion of temporary funding for both Service Excellence and the implementation of Pension for Life, as well as Employee Benefit Plan adjustments each year.

• Normally, full supply of the Main Estimates is provided in June; however, this year, as a result of COVID, the process was modified to provide 9/12ths of supply by June and the rest will be provided in December.

Details on Grants and Contribution (Vote 5) changes

• Increases:
o Pension for Life Programs:
 Income Replacement Benefit ($240M),
 Pain and Suffering Compensation ($616M), and
 Additional Pain and Suffering Compensation ($54M)
• Increased demand for PFL programs are due to increased uptake in PFL related programs as the public are becoming more aware and educated in PFL offerings.
• Increases for Pain and Suffering Compensation are also due to an increase in Veterans choosing lump sum payments over monthly payments. The original forecast redacted included the assumption that 43% of Veterans would choose lump sum and 57% would choose monthly. This forecasted ratio has been updated to 70% of Veterans choosing lump sum payments and 30% choosing monthly payments for 2020-21.

o Disability Pensions ($86M)
 The overall increase is due to temporary funding for escalation calculation error ($93.9M), which is offset by a decrease in disability pensions due to the decline in the number of War Service Veterans and Survivors.

o Research Programs:
 Research Funding Program Contribution ($4.8M),
 Research Funding Program Grant ($2M), and
 Centre of Excellence for PTSD and related mental health conditions ($4.8M)

o Caregiver Recognition Benefit ($6.4M)
 Increased demand from eligible clients

o Veterans Independence Program ($5.9M)
 This increase can be attributed to an increase in demand for Personal Care usage and average costs among War Service Veterans

• Decreases:
o Disability Awards (-$104M)
 On April 1, 2019, the Disability Award program was replaced by the Pain and Suffering (PSC) program as part of the Pension for Life suite of benefits. As a result, the forecast for DA in 2020-2021 includes only payments for awards that were approved prior to April 1 but not yet paid before the implementation of PSC (2019-2020 only) and pre-April 1 periodic payment contracts (2019-2020 and 2020-2021).

o Supplementary Retirement Benefit Payout (-$53M)
 On April 1, 2019, SRB was consolidated as part of the new Pension for Life regime into the Income Replacement Benefit along with Earnings Loss Benefit (ELB), Career Impact Allowance Supplement(CIA/S), and the Retirement Income Security Benefit (RISB). Any client in receipt of ELB and who had a favorable DEC decision will receive an SRB cash out equal to 2% of their lifetime gross ELB earnings. With an increase in DEC clients in 2018-2019, more clients will receive the SRB cash out than previously forecast. It is projected that approximately 200 clients will receive a SRB payout in 2020-2021 at a total cost of $1.1M. These payments are for Veterans who have passed away and the SRB cash out will be paid to the Veteran’s estate.

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