Public Accounts for 2013-2014 reveal that for the third consecutive year, spending on military equipment, weapons systems and infrastructure declined significantly.
That spending is down roughly $1 billion from a high point of $3.8 billion in 2010-2011.
The documents show the government failed to spend $763 million of its allocated funding this past fiscal year for those types of large-scale initiatives even as Canada flexes its military muscle overseas.
Canadian CF-18 jet fighters and CP-140 Aurora surveillance planes are currently in Kuwait and are expected to join a U.S.-led coalition's bombing campaign against the Islamic State of Iraq and the Levant within days.
The Public Accounts documents reveal the Conservatives have held onto more than $7 billion in approved spending across a spectrum of departments.
The unspent Defence Department money goes into the government's general coffers, as do the funds from other departments and agencies. But one defence expert says the unused Defence Department money comprises a quarter of the budget surplus.
"It's provided a major contribution towards the surplus," said David Perry, an analyst with the Conference of Defence Associations Institute.
Since 2007-2008, the average amount that the government has underspent is 23 per cent of the allocated funds. Over the last three decades, the average was two per cent.
"It's astounding that we've seen seven years of this degree of underspending," Perry said.
"This is completely uncharted territory over the last seven years in terms of the inability for the Department of National Defence to make use of the money the government is giving them."
Joyce Murray, the Liberal defence critic, accused the government of using the defence department as a "giant piggy bank to fund their election campaign promises and buy some votes."
"You look at how so much of the military has been starved for funds, they struggle to hire health professionals for soldiers with PTSD, for example, and yet now we have the government announcing tax initiatives for the rich."
Prime Minister Stephen Harper announced an income-splitting tax break for parents on Thursday. The measure allows the higher-earning parent of children up to 18 years of age to transfer as much as $50,000 of income to the lower-earning spouse for tax purposes.
The government is also boosting the universal child care benefit — $160 a month for kids under six, up from $100, plus a new monthly benefit of $60 for children aged six through 17, effective in 2015.
The two measures combined will cost $3.1 billion in 2014-15 and $4.5 billion in 2015-16.
The Conservatives have longed condemned the previous Liberal government for being stingy with the military, an accusation Murray suggested is hypocritical.
"Their priorities are clear and they don't match the rhetoric," she said.
Perry said the Conservatives have also failed to make decisions about big-ticket defence projects that include fighter jets and ship-building. Those initiatives would have been partly paid for by the $763 million and would create jobs and stimulate the economy.
"Decisions haven't been taken on big files, so DND can't spend the money," he added.
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