Question Period Note: LAPSED FUNDING

• Our benefits are demand-driven; so no matter how many Veterans come forward, when eligible, they will receive their benefits. Our forecasts are based on estimates and the process guarantees that whenever a Veteran comes forward, they will receive benefits.

• Our priority is to help Veterans. Over 90% of the department’s budget funds Veterans’ programs, benefits and services, $5.0 billion last year alone.

• Between 2015-2016 and 2021-2022, Veterans Affairs Canada experienced a 47% increase in the number of applications received for disability benefits.

• To keep up with the rise in demand and ensure that Veterans get services and benefits when they need them, our government has invested $11 billion for Veterans since 2016.

BACKGROUND – LAPSED FUNDING

The majority of Veterans Affairs Canada’s programs and over 90% of the $5.5B budget in fiscal year 2022-23 are quasi statutory based on the fact that these programs
(e.g. Pain and Suffering Compensation, Income Replacement Benefit, Veterans Independence Program) are demand driven and non-discretionary.

For these quasi-statutory programs, Veterans Affairs Canada annually estimates how many Veterans will come forward and receive program benefits, and how much funding will be required to meet that forecasted demand.

If, during the year, more Veterans require benefits and services than forecasted under a specific Veteran program, Veterans Affairs Canada has the ability to increase budgets accordingly through an annual Quasi Statutory Treasury Board Submission.

Conversely, if fewer Veterans than forecasted access certain benefits and services under a specific Veteran program, then any unused funding is returned to the fiscal framework in that fiscal year.

At the beginning of the next fiscal year, the annual process repeats itself with a new budget established through Main Estimates based on the updated forecast for demand.

On 5 November 2018, the following motion by MP Gord Johns (Courtenay – Alberni) was discussed for Opposition Day:

“That, in the opinion of the House, the government should automatically carry forward all annual lapsed spending at the Department of Veterans Affairs to the next fiscal year, for the sole purpose of improving services for Canadian veterans, until the Department meets or exceeds its 24 self-identified service standards.”

Veterans Affairs Canada supported this motion and the rationale was as follows:

This motion alone would have minimal impact on back logged applications.

The Government already does this for quasi-statutory programming. Money returned to the consolidated revenue fund (lapsed) for quasi-statutory programming is accessible the next year to fund Veterans programming based on demand. This is how “quasi-statutory” program authority works. Veteran programs/services are funded based on need regardless of when the Veterans come forward to receive the benefit.

Additional Information:

Lapsed Funding - 2021-22 ($921M – approximately $907M (98%) are program funds and the remaining (2%) are operational funds)

• 98% of the 2021-22 lapsed or unspent funds are a quasi-statutory expenditure authority approved by Parliament to cover the costs of Veterans benefits and services.

• The Department has no authority to spend these funds for any other purpose thereby safeguarding these funds and ensuring they are available whenever a client comes forward and is deemed eligible.

• The remaining 2% of the 2021-22 unspent funds were approved by Parliament to cover our Departmental operating costs and these unspent funds were made available in fiscal year 2022-23 through standard funding mechanisms available to Departments.

• Therefore 100% of the $921M unspent funds are still available to spend when needed.

Further Details or Context

• Departmental budgets are expenditure authorities approved on annual basis by Parliament to spend up to specific amounts for specified purposes. These authorities mean there will always be unspent funds in any given fiscal year.

• To ensure there is always funding available to cover the costs of our clients benefits and services statutory obligation, a cost estimate for this lifetime financial obligation is established, which then acts like a “bank account” that can be drawn upon, up to a specified amount annually, similar to a “line of credit”, .

• Any unused or unspent funds from the “line of credit”, is then returned to the “bank account” so that the funding is still available in the future when needed.

When Pressed:

Q1 - What is the amount of the lapsed funding from last year (21/22)?

Lapsed funding for 2021-22 was $921M

o $611M - Pension for Life Programs where production did not meet projections
o $48M – Disability Pension and Awards Programs
o $245M – normal amounts of unspent funds in 20 Quasi Stat programs
o $17M – Operating Budget Carry Forward