Good afternoon, Mr. Chair. I don't think I will be using the extra one second.
Good afternoon, vice-chairs and members of the committee.
Thank you for the invitation to appear before you today. This is my first virtual appearance before the committee. I am pleased to be here today to discuss my office's report entitled “Disability Benefit Processing at Veterans Affairs Canada”, which was published on September 28, 2020.
The Parliamentary Budget Officer, or PBO, supports Parliament by providing independent and non-partisan economic and financial analysis to parliamentarians. As the legislation states, we provide this analysis for the purposes of raising the quality of parliamentary debate and promoting greater budget transparency and accountability.
Consistent with the PBO's legislative mandate, at the request of your fellow committee member, Ms. Blaney, the member for North Island—Powell River, my office prepared an independent analysis of the service standards of Veterans Affairs Canada for processing disability benefit applications. The purpose of this report is to assess the impact of additional resources on the evolution of the backlog of disability benefit applications and on maintaining service standards once the backlog has been addressed.
In March 2017, the number of pending applications was 20,693, but by March 31, 2020, it had reached more than 49,000. Of these, 22,000 were considered complete and were waiting only for a decision from the department.
While the resources allocated to processing applications for disability benefits provided by VAC have increased in recent years, the influx of applications has consistently outpaced the department's processing capacity.
In June 2020, the government allocated an additional $192 million in funding to help the department reduce the backlog of applications for disability benefits. With part of this funding, the department plans to retain 160 temporary employees already working for VAC and to hire an additional 300 temporary employees.
Based on our analysis, we estimate that, with these additional resources, the backlog will be approximately 40,000 applications by the end of fiscal year 2021-22. Our projections show that, without these additional resources, the number of pending applications for disability benefits will reach approximately 140,000 by that time. Further, with these additional hires, the backlog will stop increasing and the number of pending applications will be reduced by approximately 10,000 applications by the end of 2021-22.
With the human resources currently allocated to processing applications at VAC, the backlog should stop growing, but it will not be eliminated by March 2022. In addition, if all the employees hired with the additional funding are not retained, the backlog will start to increase again. While a number of scenarios could lead to eliminating the backlog, our report examines two options.
The first option we assessed is the extension of the additional funding recently announced. We estimate that the total cost of this option would be $105 million from now until the end of fiscal year 2024-25.
The second option we assessed is the resource requirements needed to eliminate the backlog within 10 months and maintain the service standards thereafter. We estimate the total cost of this option would be $126 million from now until the end of fiscal year 2024-25.
I would be pleased to respond to any questions you may have regarding our analysis or other PBO work.
Thank you, Mr. Chair.