Question Period Note: MAIN ESTIMATES – DEPARTMENTAL BUDGET 2025-2026

• Veterans Affairs Canada’s 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 for all Veterans and their families.
• 94% of the Department’s budget represents payments to Veterans, their families and other program recipients.
• Veterans Affairs Canada’s budget reflects the historic steps we have taken to ensure Canadian Veterans and their families are provided with the support they need.
• The 2025-26 Main Estimates provide VAC funding of $7.8 billion.
• These contributions for Veterans are an important part of achieving Canada’s NATO targets.

The 2025-26 Main Estimates provide Veterans Affairs Canada funding of $7.83 billion, which represents a net increase of $1.62 billion (26%) compared to last year’s Main Estimates (2024-25).
The 2025-2026 Main Estimates reflect funding adjustments for the following:
• Annual quasi-statutory program adjustments;
• Funding for newly signed collective bargaining agreements;
• Funding for the Manuge Class Action Settlement agreement;
• Funding for the Juno Beach Centre, Veterans and Family Well-Being Fund and Research;
• Funding for Telemedicine Services; and
• Funding for Advertising.
The net increase of $1.62 billion is comprised of the following items:
• $625M increase in Vote 1 (Operating):
o Other Health Purchased Services: $280M increase due to overall increase in demand and costs for treatment/healthcare.
o Manuge SPA (Special Purpose Allotment): $275M – new funding to meet obligation in the Manuge Class Action Final Settlement Agreement.
o Veterans Support Services: $50M increase due to updated forecast from new rehabilitation contractor.
o Regular operating: $19M increase due to funding for Collective Bargaining, Service Excellence (Case Management), and Manuge, offset by reduction due to the Reduced Government Spending initiative.
o Advertising Initiatives: $2M received for Advertising funding.
• $985M increase in Vote 5 (Grants and Contributions):
o Increase due to increased demand and/or increased expenditures for the following programs:
 Pain and Suffering Compensation: $687M
 Income Replacement Benefit: $229M
 Housekeeping & Grounds Maintenance: $46M
 Additional Pain and Suffering Compensation: $33M
• $7M increase in Statutory budget
o Employee Benefit Plan: Increase due to annual adjustment exercise, Manuge, and Collective Bargaining Agreement.

Q1 – Why is the Department’s budget increasing in these Main Estimates compared to the previous year?
The 2025-2026 Main Estimates reflect funding adjustments for the following:
• Annual quasi-statutory program adjustments which are demand driven;
• Funding for newly signed collective bargaining agreements;
• Funding for the Manuge Class Action Settlement agreement;
• Funding for the Juno Beach Centre, Veterans and Family Well-Being Fund and Research;
• Funding for Telemedicine Services; and
• Funding for Advertising.
Q2 – Does the increased budget result in increased program funding?
Yes. Overall, VAC’s budget is increasing by $1.62 billion (or 26%) over the 2024-25 Main Estimates, of which 94% represents payments to Veterans, their families and other program recipients.
Q3 – Is this funding enough for the proper care and treatment of Veterans?
Yes, the majority of VAC’s funding is for Veterans benefits and services, based on demand and considered “quasi-statutory” in nature. VAC’s client and expenditure forecast is updated annually and is used to determine budgetary requirements.
VAC builds its budget to ensure that all eligible Veterans who come forward receive benefits to which they are entitled.
Q4 – What is a Quasi-statutory program?
The majority of VAC’s programs are demand driven (or quasi statutory). For these quasi-statutory programs, the Department annually estimates how many Veterans will come forward and receive program benefits, and how much funding will be required to meet that forecasted demand.
Q5 – What will happen if demand for a program exceeds the forecasted expenditures?
If, during the year, more Veterans require benefits and services than previously forecasted under a specific Veteran program, our Department has the ability to increase budgets accordingly through an annual Quasi Statutory Treasury Board Submission.
Q6 – Why has the funding for Pain and Suffering Compensation increased by $687M?
More Veterans are coming forward in need of more supports. Increased spending is forecasted for the Pain and Suffering Compensation as we anticipate continued increased production as well as an increase in the number of clients electing to receive their Pain and Suffering as a lump sum cash out.

Q7 - Why are program costs increasing but there is still a backlog?
Between 2015-2016 and 2024-2025, Veterans Affairs Canada experienced a 92% increase in the number of applications received for disability benefits.
As of March 31, 2024, the Department reduced the backlog of applications by 75%, from 22,138 as of March 2020 to 5,637. However, the backlog increased to 11,247 as of March 31, 2025. This is due entirely to increased demand from CAF and RCMP Veterans.
Unfortunately, our service standard also declined for the 2024-2025 fiscal year, where we met the service standard for first applications 47% of the time (69% in 2023-2024).
A contributing factor for the recent rise in the backlog is a 7% increase in the number of applications received in 2024-2025 compared to the previous fiscal year (average 7,200 applications per month compared to 6,700 per month, respectively). This increase, combined with a loss of some trained decision-makers, has impacted the recent improvements in processing times and reductions to the backlog.
Despite the decline in the service standard results, the number of applications completed increased by 6% in 2024-2025 when compared to the previous fiscal year (55,700 to 58,900).
The number of applications received continues to increase and is not stabilizing. Total disability benefit applications received were:
2024-2025 (86,000); 2023-2024 (80,000); 2022-2023 (73,000); 2021-2022 (66,000); 2020-2021 (46,000 – pandemic year); and 2019-2020 (63,000).
In 2019-2020, the number of applications received averaged 5,200 applications per month and rose to an average of 6,700 applications per month in 2023-2024. This average increased again in 2024-2025 to 7,200 applications per month.
Since 2021-2022, we reduced the average processing time for first applications by 47% from 39.7 weeks to 20.9 weeks in 2024-2025 (20.2 in 2023-2024).
Applications are fast-tracked for those who are medically at risk (e.g., palliative, advanced age, etc.) or who have an immediate, unmet health need related to their claimed condition.
In the 2024-2025 fiscal year, the average processing times for first applications were 20.4 weeks for female and 21.0 weeks for male. In the same timeframe, the averages were 20.5 weeks for Francophone and 20.9 weeks for Anglophone. It is important to note that the gap will continue to fluctuate.