Mr. Hayes, I'm very glad you asked this question because it has caused a lot of confusion for veterans and their families, and it's an issue that because of its moderate degree of complexity can be used to actually sow seeds of confusion.
You're exactly right. A department cannot spend more than its estimated budget, its estimate. In fact, it does have to go back to Parliament to get more funds approved, so every department needs to estimate what they will spend and try to do it as accurately as possible. Estimates that make it within 1% or 2% of the actual spend is very good budgeting.
We don't know what actually goes out the door until the public accounts come in, which is over a year later. Then you try to learn from the public accounts where you did not spend.
Veterans Affairs is a very unique department within the federal government, in that of the $3.5 billion or so of a budget, 90% of that goes to payments to veterans and their families. With statutory benefits, once a veteran or their survivor is eligible for that benefit, in most cases it will be paid until the end of the life of that veteran.
In recent years we've seen some lapsing funds where in the public accounts cycle we don't actually spend what is fully estimated. The majority of that comes from the aging demographic of the traditional war veteran, World War II and Korea. As Mr. Valeriote so rightly noted, among these inspiring gentlemen we were with in the Netherlands the oldest was 97 and the average age was 91 or 92.
That generation where 1.1 million Canadians served in World War II is now in their late eighties to nineties. I'll give you an example of how challenging this is. The estimates do not anticipate veterans passing away over the course of the cycle. That will go into the estimates for the following year. When we assumed government in 2006 there were approximately 230,000 World War II veterans in Canada. In the last year it's around 90,000. It's the same with the Korean War. There were almost 15,000 when we formed government and less than 10,000 now.
We see most of the lapsed funds coming from the fact that, sadly, we're losing a large number of our World War II and Korean War veterans. That's why these commemorations, the 70th of VE Day and of the liberation of the Netherlands and Juno last year, are so profoundly important, but in terms of lapsed funds, this is why.
Other programs that are demand driven under the new veterans charter, for instance, in career transition or something like that, if those programs aren't being taken up as quickly or by as many veterans as we might like, that's where we actually have to learn and make changes. But with some lapsed funds it's due to the nature of the fact that 90% of our budget is statutory payments to veterans and their families.