Question Period Note: MAIN ESTIMATES – DEPARTMENTAL BUDGET 2026-27

• Veterans Affairs Canada (VAC)’s budget reflects the government’s commitment to ensuring Canadian Veterans and their families are provided with the support they need.
• Over 90% of the Department’s budget represents payments to Veterans, their families and other program recipients.
• The 2026-27 Main Estimates provide VAC funding of $8.2 billion.
• These contributions for Veterans are an important part of achieving Canada’s NATO targets.
• The Estimates do not incorporate new funding announced in Budget 2025 but do include the impacts of the Comprehensive Expenditure Review.

The 2026-27 Main Estimates provide VAC funding of $8.2 billion, which represents a net increase of $340 million (4%) compared to last year’s Main Estimates (2025-26).
The 2026-2027 Main Estimates reflect funding adjustments for the following:
• Annual quasi-statutory program adjustments;
• Funding for newly signed collective bargaining agreements;
• Funding for FHCPS contract costs;
• Funding for Peer Support; and
• Funding for Advertising.
The net increase of $340 million is comprised of the following items:
$225M decrease in Vote 1 (Operating):
o Manuge SPA (Special Purpose Allotment): ($250M) – decrease in funding profile as less settlement payments are to be issued in 26/27.
o Regular operating: ($47M) decrease due to conclusion of Service Excellence funding, Manuge and Reduced Government Spending (RGS) initiative
o Veterans Support Services: $36M increase due to increase in demand
o Other Health Purchased Services: $35M increase due to overall increase in demand and costs for treatment benefits offset by CER deductions.
o Advertising Initiatives: $500K received for Advertising funding.
$567M increase in Vote 5 (Grants and Contributions):
o Increase due to increased demand, increased production, and/or increased expenditures for the following programs:
 Pain and Suffering Compensation: $286M
 Income Replacement Benefit: $208M
 Additional Pain and Suffering Compensation: $54M
 Housekeeping & Grounds Maintenance: $22M
$1.5M decrease in Statutory budget
o Employee Benefit Plan: decrease due to adjustment of rate by central agencies.

VAC’s 2026-27 Main Estimates are $8.2 billion
Overall Budget Growth
• Increase of $340 million (4%) over 2025–26 Main Estimates
• Increase is related to increase in demand, increased production and costs for benefits and services
• Over 90% of VAC’s budget represents payments for Veterans, their families, and other recipients
Budget Increase Drivers
• Annual demand-driven (quasi-statutory) program adjustments
• Advertising initiatives
• Peer Support
• Funding for newly signed collective bargaining agreements
Support for Veterans
• Majority of funding directed to Veterans’ benefits and services
• Programs are demand-driven (quasi-statutory): ensures all eligible Veterans receive entitled benefits
• Budgets are updated annually to reflect expected demand
Managing Increased Demand
• If more Veterans require benefits or services than forecasted, budgets can be increased during the year through Treasury Board submissions
Pain and Suffering Compensation – program with largest increase
• Increase of $286 million in 2026–27, driven by:
o Faster processing and production