Finance Committee on Feb. 5th, 2026

[The Chair, Liberal, Karina Gould]

Good morning. I call this meeting to order.

Welcome to meeting number 22 of the House of Commons Standing Committee on Finance. Pursuant to the order of reference of Wednesday, December 10, 2025, and the motion adopted on Wednesday, December 10, 2025, the committee shall resume consideration of Bill C-15, an act to implement certain provisions of the budget tabled in Parliament on November 4, 2025.

I would like to welcome Minister McKnight, Minister of Veterans Affairs. She is joined by Christine McDowell, acting deputy minister, and Steven Harris, senior assistant deputy minister. As well, Jonathan Adams, director general of finance, and Nathan Svenson, senior director, disability and health care policy, are joining us by video conference today. Virtual witnesses have conducted a mandatory witness onboarding test.

Minister, you have five minutes for opening remarks. Please go ahead.

Thank you.

[Jill McKnight, Liberal, Minister of Veterans Affairs]

Thank you.

Good morning, colleagues. Thank you for the invitation to come and speak to you this morning about budget 2025.

Madam Chair and members, through the budget implementation act, Bill C-15, our government is delivering on our commitments to Canadians, spending less on government operations so that we can invest more in Canadians, including veterans. Canada owes a debt of gratitude to those who have served and who do serve our country in uniform. The Government of Canada remains steadfast in its responsibility to deliver the care, benefits and recognition that our veterans and their families deserve.

As demonstrated in budget 2025, we are taking concrete steps to ensure that veterans receive the benefits in a timely manner. We are investing $184.9 million over four years, beginning in 2026-27, and $40.1 million ongoing, to stabilize the disability benefit service delivery system. This investment includes $24 million over two years to modernize IT infrastructure and operational processes to manage increasing demand. For the first time, this commitment is backed by permanent funding for the years ahead and reaffirms our commitment to Canada's veterans.

Additionally, the budget aligns the reimbursement rate under the cannabis for medical purposes benefit with current market prices. To be clear, we are protecting access to medically authorized cannabis for those who are eligible to claim it. The adjustment in budget 2025 does not impact veterans' authorizations for reimbursement, eligibility for the benefit or the daily gram limits. On a cash basis, this adjustment will provide $129 million in savings annually.

Additionally, and in line with public sector accounting practices, future savings must be recognized immediately with changes to benefits that impact long-term liabilities owed by the federal government. As such, budget 2025 accounts for $4.23 billion in savings, the long-term impact of the reimbursement rate change. With this adjustment to the reimbursement rate for the cannabis for medical purposes benefit from $8.50 per gram to $6 per gram, the actual impact to Veterans Affairs Canada's annual budget remains less than 2% on a cash basis. Veterans can and should be assured that no reductions to any other benefit will be included in these savings.

I would also like to address the proposed amendments to the Pension Act, the veterans well-being regulations, the Department of Veterans Affairs Act and the veterans health care regulations that are included in Bill C-15.

The proposed amendments to the Pension Act will clarify that “province” does not include Yukon, the Northwest Territories or Nunavut for an annual adjustment method for disability pensions and related benefits. The BIA is also clarifying the rules to make it clear for veterans how annual adjustments are calculated for the former earnings loss benefit and to confirm that these calculations have been applied consistently. Furthermore, it clarifies how the maximum monthly charge for accommodation and meals is calculated in the long-term care program.

Taken together, these updates make the calculation methods easier to understand and remove any confusion about how they should be interpreted. Overall, they provide veterans more clarity and transparency. These updates do not change how benefits have been calculated in the past. They will not have a retroactive impact on reimbursements that have already been disbursed. To be very clear, veterans will not be asked to or required to repay payments received for these benefits.

Definitions are being clarified in the legislation to reflect long-standing practices at Veterans Affairs Canada. These clarifications will not result in retroactive overpayments. Canadian Armed Forces members, CAF veterans and their survivors will continue to receive the same benefits they currently receive. The same formulas that have been used will continue to be used when calculating these benefits. Under the Pension Act, CAF veteran pension increases will continue to be calculated as they have been, using the higher of the consumer price index and the wage rate increase. This is exactly as it was prior to the introduction of the budget implementation act.

Colleagues, thank you.

[The Chair, Liberal, Karina Gould]

Thank you very much, Minister, for those opening remarks.

We will now begin with Mr. Tolmie for six minutes.

Welcome to the finance committee.

[Fraser Tolmie, Conservative, Moose Jaw—Lake Centre—Lanigan, SK]

Thank you, Madam Chair, for having me here today.

Thank you, Minister, for joining us today.

There are a couple of questions that I'd like to go over with you today.

In 2021, your government privatized veteran rehabilitation services through a $572-million contract with PCVRS, approximately $104 million per year. The Union of Veterans' Affairs Employees calculated that this contract costs 25% more than public service delivery. Now you're implementing a 7% budget reduction. Let me understand this. You've increased costs by 25% through privatization, and veterans are reporting worse service. Your response is to cut the budget by 7%.

Our Standing Committee on Veterans Affairs will soon be conducting an in-depth study of this contract. Can you explain to this finance committee why taxpayers should pay an extra 25% for something that is performing worse than what came before?

[Jill McKnight, Liberal, Delta, BC]

Thank you, Mr. Tolmie, for your question and also for your service to Canada.

I'd like to be clear: We are not cutting the benefits and services that are provided to veterans. We are making an adjustment to the rate of reimbursement for cannabis for medical purposes. The contract with PCVRS that you mentioned has connected veterans with a broader network of health professionals across the country.

[Fraser Tolmie, Conservative, Moose Jaw—Lake Centre—Lanigan, SK]

Minister, when I sit in this chair and look at veterans and hear that costs are being cut and that veterans are not being provided the service, there are questions. Right now, the math is not lining up here, so let's do some math together.

With 94% of your budget going to veterans benefits, that leaves 6% for operations, approximately $468 million. The Prime Minister wants 7% cuts across government, which would be $546 million from your total budget. You claim that no services will be cut, yet achieving a 7% savings would require eliminating your entire operational budget, and then some. Can you reconcile these numbers for me?

[Jill McKnight, Liberal, Delta, BC]

This budget actually demonstrates an investment in veterans. We are investing $184.9 million over four years, and $40.1 million ongoing in long-term funding that both stabilizes and modernizes the disability benefit service. We are not cutting. We are investing in veterans' services delivery.

[Fraser Tolmie, Conservative, Moose Jaw—Lake Centre—Lanigan, SK]

Minister, when I invest money, I put money into something. When I hear that you're cutting, that is not an investment; that is a reduction. Can we try that answer again?

[Jill McKnight, Liberal, Delta, BC]

We are not cutting benefits and services to veterans. We are making an adjustment to the rate of reimbursement for cannabis for medical purposes to align with market rates. Veterans continue to receive the same access to benefits and services that they have received and will continue to receive.

[Fraser Tolmie, Conservative, Moose Jaw—Lake Centre—Lanigan, SK]

Let's look at the 7% that you want to cut across the board, which includes Veterans Affairs. Can you explain that to me?

[Jill McKnight, Liberal, Delta, BC]

As I said, we are making an adjustment to the rate of reimbursement. We are not making a cut. We are making an investment in the benefits and service delivery to veterans of $184.9 million with $40 million ongoing.

[Fraser Tolmie, Conservative, Moose Jaw—Lake Centre—Lanigan, SK]

Okay. If you're going to invest, there always has to be a better rate of return. We're not hearing that from veterans about the service they're being provided. How is this reinvestment by cutting the budget going to explain how veterans who are waiting for just normal service, who are being denied claims, are going to get better service? How does this translate into better service with the cuts that you're bringing forward?

[Jill McKnight, Liberal, Delta, BC]

As I have said, we are not making cuts. We are making an investment, and with that investment, we will continue to modernize and stabilize service delivery to ensure that veterans receive timely, responsible and accessible support.

[The Chair, Liberal, Karina Gould]

Thank you, Minister.

Thank you, Mr. Tolmie.

We will now continue with Mr. Fragiskatos for six minutes, please.

[Peter Fragiskatos, Liberal, London Centre, ON]

Minister, thank you very much for being here. Thank you for the work that you're doing.

I'm going to start with a very general question. I ask this because I think that when constituents and Canadians writ large hear “Veterans Affairs”, they think they know—and I'll extend that out to members of Parliament also—what Veterans Affairs does, but I think it's good to put on the record a crystal clear understanding of what your work looks like, and specifically what the department is tasked with carrying out.

What is the mandate of Veterans Affairs Canada?

[Jill McKnight, Liberal, Delta, BC]

Veterans Affairs Canada is here to serve those who have served our country. We are committed and we are focused on ensuring that veterans have access to all benefits and services for which they are eligible.

When a veteran serves, we know that so too does their family, and our acknowledgement recognizes that by supporting veterans we are also, at times, supporting their families to ensure that we recognize their long-term commitment to serving Canada.

[Peter Fragiskatos, Liberal, London Centre, ON]

Thank you.

Can you speak specifically about the transition out of the military and what the process is like, but also specifically how investments of the type that you're overseeing assist in this?

[Jill McKnight, Liberal, Delta, BC]

Certainly. Thank you.

Service and after service are not separate phases; they are part of one continuum. The two roles that I hold—and I think this is perhaps what you're referencing—in the capacity as Minister of Veterans Affairs and Associate Minister of National Defence connect the decisions that we make while someone is serving into how it can shape their transition, well-being and opportunities once they have re-entered civilian life.

As I said, when a Canadian chooses to serve, there is an implicit commitment in return. Women and men of the CAF serve with the expectation that their country will take care of them, not only during their service, but long after they take off their uniform. Our responsibility doesn't end at release.

My role is to ensure a smooth, seamless transition from service to civilian life. This means strengthening supports for veterans, aligning the programs of National Defence with Veterans Affairs Canada, and ultimately addressing any gaps in that transition. That can include employment, education, health and family supports.

[Peter Fragiskatos, Liberal, London Centre, ON]

Thank you very much.

You touched on it before I could, but you are obviously the Associate Minister of Defence as well. Canada is now moving toward living up to its NATO commitments. We're seeing massive investments—finally—in defence. This budget speaks to that. Could you go into those details in your capacity as associate minister, and why we're doing this?

[Jill McKnight, Liberal, Delta, BC]

Certainly. This budget delivers generational investments in Canada's defence. We're investing billions in our capabilities, our infrastructure and our people to ensure that the CAF can protect Canada and Canadians in a more complex and dangerous world. The investments that we're making are strengthening both our security and our economy.

We're committing $1.4 billion over the next 20 years to CAF housing projects nationwide. We're modernizing across all domains with planned investments in aircraft, submarines and light utility vehicles, ensuring that CAF has the equipment it needs, both at home and alongside our allies abroad. We will meet NATO's 2% defence spending target this fiscal year, and we are accelerating investments to put Canada on a path to meeting NATO's 5% defence investment pledge by 2035.

This is a clear commitment to CAF and to Canadians. We are rearming, rebuilding and reinvesting in the Canadian Armed Forces while delivering economic benefits for Canadians today and long into the future.

[Peter Fragiskatos, Liberal, London Centre, ON]

Thank you for that.

I think it's a very important part of the budget, to say the least. The fact that you're able to highlight it here for us today is obviously crucial.

I want to look at one specific thing that you mentioned, which is housing for those in the Canadian Armed Forces. Why that kind of investment? It's obviously important, but what is the rationale? What will this funding do?

[Jill McKnight, Liberal, Delta, BC]

As we know, housing is one key component of quality of life for those who are serving and for their family members. The $1.4 billion over the next 20 years for CAF housing is going to allow for new builds and construction, which is already under way from Halifax to Cold Lake, improving affordability and quality of life for serving members. We're also using innovative solutions to address urgent needs.

I recently had the opportunity to be in Comox to announce DND's acquisition of 63 units of housing that will have members moving in later this spring. This reflects a practical, solutions-focused approach that is supporting our people.

[Peter Fragiskatos, Liberal, London Centre, ON]

Thank you very much.

I think I have 15 seconds. I'll take the opportunity to say that these generational investments in defence that we are seeing certainly serve the country well. There are all sorts of economic benefits that come out of that and tens of thousands of jobs that will be sustained and created.

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Fragiskatos.

We will continue now with Mr. Garon for six minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

Thank you for joining us today, Minister.

With all due respect, you're not the minister of national defence; you're the Minister of Veterans Affairs. According to the very definition given by the Minister of Finance of what an investment is, a definition nobody agrees with, but we'll use it anyway, almost 100% of your budget is for ongoing expenses, not investments. Since nineteen-twentieths of your budget is spent on benefits, that means one twentieth of your budget goes to providing services.

You say you can reduce daily expenses by 15% over three years while maintaining direct services to veterans. Can you confirm you're able to do that?