Thank you, Mr. Chair.
Good morning. My name is Keith Hillier. I am the assistant deputy minister of service delivery at Veterans Affairs Canada. I am here with my colleague James Gilbert, the assistant deputy minister for policy, communications and commemoration. We welcome this opportunity to be with you today.
We want to provide you with the necessary facts and figures and other details that we hope will reassure you that there has been no reduction in benefits, programs, or services for Canada's veterans. In fact, it is quite the opposite. Our objective at the department has always been to improve the quality of life for veterans, and to do so by ensuring that they receive the benefits and services they so rightly deserve.
Veterans Affairs Canada is not only delivering on this commitment, it is improving its policies, its programs, and business practices so that veterans receive even faster and better service than ever before.
Now, we're the first to admit that the process is sometimes a bit of a challenge, both for veterans and us. But I sincerely believe we are making significant progress, and we are determined to maintain this momentum. We also know that there have been some recent concerns raised about staff numbers at Veterans Affairs and we hope to address this important issue as well during our time with you this morning.
As members of this committee, you know as well as anyone that the department is at an historic crossroads. The needs and the demographics of those we serve are changing—and dramatically so. We regret that after decades of brave service to our country, we are seeing an average of 1,500 veterans pass away each month from our Second World War and Korean War population, which was estimated as of March of this year to be approximately 136,000.
The sad reality is reflected in the changing demographics of the men and women we serve at Veterans Affairs. I'll just give you a quick snapshot. As of March 2011, Veterans Affairs Canada provided benefits to approximately 218,000 clients. The client base is composed of 140,000 veterans--those who have served in war, the Canadian Forces, or RCMP--and the remainder of approximately 78,0000 would be survivors.
Last year marked the first time that Canadian Forces veterans clients out-numbered war service veterans at VAC. This demographic shift will only grow more pronounced, because the average age of our war service clients right now is 88 years old, compared to 58 for our Canadian Forces veterans. As a result, VAC's client base of war service veterans is expected to decrease by approximately 42% over the next five years, whereas the number of Canadian Forces veterans who will become clients of the department is expected to increase by approximately 24% over the same planning period.
This shift in veteran population is a key factor in the department's forecast expenditures.
We are witnessing a reduction in the number of clients who served in wartime. As a result, the amount that we spend on our traditional programs, such as disability pensions, should also decrease by about 7% in the next five years. This reduction in overall expenses is not occurring at the same pace as the reduction in the number of clients, given that veterans tend to require more care as they age.
Therefore, payments and benefits related to these new conditions, or to those which have deteriorated, continue to increase. During this time, expenses related to programs for new veterans, namely disability awards and rehabilitation services offered by virtue of the New Veterans Charter, will continue to increase by an estimated 33% and 49% respectively over the next five years.
With all this in mind, I want to be clear that the demographic shift taking place does not result in any cuts or reductions in programs or services for Canada's veterans. We simply expect to have a lower uptake of our programs toward fewer veterans.
Unfortunately, there have been some reports suggesting that $226 million in cuts are coming. This is not the case, and I would like to clear this up by taking you through VAC's report on plans and priorities, where I believe that number of $226 million came from.
The report on plans and priorities is a planning document—and that's it. The projected drop in our budget in 2012-13 is not only a demographic issue but also a reflection of government's routine planning process. This means that programs that begin to ramp up will see their budgets increase after a second and more detailed forecast is prepared in the fall of each year. This, by the way, is known as the supplementary estimates process. As you know, the budget allows for adjustments in funding if the landscape changes, say, if the number of veterans needing support in the future increases.
Programs serving our growing modern-day veteran clients likely will have additional funding added to their budgets as part of this normal business process. This increase would be reflected in the following year's plans and priorities. In the last two years, for example, the average end-year adjustments to the department's budget have been in the order of $150 million. The scope of these adjustments will continue to go up as Canadian Forces clients and their survivors continue to grow and the usage of our programs increases.
For the current fiscal year, we will solicit a larger amount of additional funds than in the previous 12 years because of the increase in expenses related to the New Charter program.
If we take the example of disability awards, the projected increase for this year should exceed $200 million, while other smaller programs offered pursuant to the New Charter should result in more modest increases. In fact, our calculations for this year should be enough to amply bridge the gap in terms of the expenses forecasted in the RPP. Incidentally, the reason we are here today is to discuss this matter.
All of these elements are the result of open and transparent processes in the context of which federal budgets are established and ministerial expenses are adapted.
Having said that, we are projecting that the department will be serving fewer veterans and, as a result, we recognize that the department itself is going to get smaller. We have a choice: we can either fear this change, or embrace it as an opportunity to reorganize the department and to ensure that we have the right people with the right skills in the right places to meet the needs of veterans of all ages. We have chosen the latter.
Furthermore, to provide some context, I would point out that close to 30% of our employees are eligible to retire over the next five years. Consequently, we believe that we can manage this change through attrition and good human resources planning and staffing. For example, Canadian Forces veterans are, in some cases, settling in parts of the country where we do not have a sufficient local presence, and we must adapt to that quickly—and we are. One way we are doing this is by ensuring a stronger presence on and near Canadian Forces bases. This just makes sense. We need to make sure that our staff are located where the demand for our help is the greatest, and we need to pull back some of our resources from those places where there are increasingly fewer veterans to serve. At the same time, it is critical to maintain a strong presence across the country and at our headquarters in Charlottetown, Prince Edward Island.
We also need to ensure that we have the right policies in place to keep pace with the evolving needs of the men and women we serve. The New Veterans Charter was a crucial first step in modernizing our benefits and programs to meet the new realities of the 21st century. Implemented in 2006, the New Veterans Charter represents a more complete and compassionate approach to helping injured and ill veterans and Canadian Forces members. It also introduced significant new measures to assist their families.
The new Veterans Charter consists of many programs and services that are either new or significantly upgraded. Case management, for example, is the first step in working with veterans and their families to develop the necessary recovery strategies to meet their individual needs. Over the past year, we have added 20 case managers across the country to provide greater capacity for one-on-one support for veterans and their families, who need care and support during the transition.
The disability award is a tax-free payment that recognizes and compensates for the non-economic impact, or pain and suffering, of an illness. Recently, there were some new changes announced to the payment options for the disability award. In addition, there are ongoing financial benefits, rehabilitation services, and also health benefits. Certainly, there is family support. Families of veterans receive more help than ever, from counselling to education grants. We also provide career transition services and, finally, the death benefit, which acknowledges the tragic and non-economic impact on families when they lose a loved one.
In short, the new Veterans Charter has all of the necessary components to provide veterans and their families with the right help at the right time. There were unforeseen gaps in the new Veterans Charter, which veterans and their supporters have let us know about. They told us that most seriously injured and vulnerable veterans were not receiving the full support they needed, whether financial or otherwise. That's why enhancements to the new Veterans Charter were implemented just this month.
By way of a quick review, these enhancements deal with four key areas.
The government established a minimum pre-tax income of $40,000 a year for all ill or injured veterans, either for those who are in our rehab program or until they are 65 years of age, if they are unable to gain suitable employment.
The government has provided access to monthly allowances for seriously injured veterans.
The government has added a new $1,000 monthly supplement to the permanent impairment allowance for those who are most seriously injured or ill, or who are unable to be suitably and gainfully employed.
Also a new flexible payment option has been created for CF members receiving a disability award. With these new enhancements, recipients will be able to receive the disability award in annual instalments, or as a combination of a partial lump sum and annual instalments. We realize that veterans deserve the right to choose how it's paid.
We also know that we need to keep improving the way we deliver our services and benefits, and I'd like to take a moment to talk about some of the things we are doing in terms of our five point plan.
We are reducing the complexity of our policies and programs. We are overhauling the way we deliver services. We are strengthening our partnerships with the Canadian Forces. We are sustaining the new Veterans Charter via the recent enhancements made, and we are aligning our operations with the changing demographics of the veterans we serve. Those are the five pillars, moving forward.
In reducing complexity, we have been taking steps to reduce the wait time for disability benefits from 24 weeks to 16 weeks. Through better use of technology, veterans are now able to receive direct deposit, not just for their disability or government cheques but also for the payments they receive with regard to the reimbursements of their treatment benefits. As well, we're providing front-line staff with greater authority to make decisions. We have delegated much authority to the field, meaning that our staff in the field will be able to get the services and benefits that veterans need much more quickly.
As I mentioned, we're also overhauling our service delivery and are working very hard with the Canadian Forces. We've developed 24 Integrated personnel support centres across Canada, and every day over 100 staff at Veterans Affairs actually go to work at or on a Canadian Forces base. I've touched on a number of the priority areas and just want to outline that we're actually trying to make sure that we have the right people in the right place with the right skills, and that they're fully equipped to do their job.
As one last point, I would note that the changes I've described are being driven as much by our employees as from the top down. I see this every day. People who work at Veterans Affairs are there because they want to be, because this is a labour of love for them. This is particularly true of our front-line employees, men and women who consistently go the extra mile for veterans. What's more, it's true, because I regularly hear from veterans who are genuinely grateful for the professional care and attention they receive from our employees across the country. In this way the department and its entire staff are pulling in the same direction.
We know there's always room for improvement. The best news, though, is that it's often our employees who are telling us how we can do things better and how we should be doing things differently. That can only bode well for the veterans, Canadian Forces members and their families who count on our care and support.
With that, Mr. Chair, I want to thank you and your committee for the time here today. I hope we've addressed some of your immediate concerns, and we look forward to your questions.
Thank you.
