The figures are contained in answers to written questions posed in Parliament by the opposition and come as the Conservative government tries to figure out how to implement a series of changes recommended by the House of Commons veterans committee.
Like other departments unable to spend their appropriation within the budget year, Veterans Affairs was required to return its unspent funds to the treasury.
Conservative MP Parm Gill, parliamentary secretary to the veterans minister, stuck to the government's position on Thursday, describing the lapsed funds as a "statutory" obligation and a "normal practice of all governments."
He pointed out the department's annual budget has seen an injection of an extra $5 billion since 2006, over and above what Paul Martin's Liberals planned to spend.
Gill went on to list a series of enhanced benefits, including the myriad of stipends and allowances that have the potential to give the most seriously injured as much as $8,000 a month in support.
But the explanations didn't satisfy either veterans groups or opposition parties.
The Royal Canadian Legion wrote Veterans Affairs Minister Julian Fantino on Thursday, demanding a detailed accounting of which programs had lapsed funding and why.
"We want that information from government," said Scott Ferris, the Legion's marketing director. "There has to be a complete and detailed explanation for this."
The figures put before Parliament show the veterans department handed back a relatively small percentage of its budget in 2005-06, but shortly after the Conservatives were elected the figure spiked to 8.2 per cent of allocation.
The number began trending downwards until 2010-11 when lapsed funds accounted for only 1.16 per cent of the department's budget, but after 2011, the pot of unspent cash began growing again.
Two significant events took place that year, which could have had an effect on the department's ability — or willingness — to spend money. Significant changes to legislation governing veterans benefits was passed and the Harper government began ramping up its deficit-cutting drive.
Don Leonardo, of Veterans Canada, says he believes it was part of a deliberate strategy to balance the federal budget and points out that deputy ministers and others received bonuses for meeting fiscal targets.
He was excluded from a government-organized consultation meeting with Fantino this week in Quebec City. Although, he wasn't told why, Leonardo says he suspects it's because he has been increasingly critical of the department's policy.
"It's not about left and right in politics." said Leonardo, who is an injured veteran. "It's about what's right and what's wrong and the Conservatives on this file are absolutely wrong."
The figures make a mockery of the government's claim that further changes to benefits and services have to come slowly and as the federal treasury can afford them, he said.
Last June, the Commons veterans committee released a report with 14 recommendations to improve services, non-binding suggestions which the Conservatives have divided into measures that can be done without legislative change and those that require money.
It remains unclear how much of the second phase will make it into next spring's federal budget, the last before a federal election scheduled for October 2015.
The committee recommended, among other things, that the pain and suffering awards to severely injured soldiers be increased to match what the courts or provincial compensation systems provide in civilian cases and that benefits be guaranteed for life to the most seriously disabled vets.
The country’s veteran ombudsman singled out care for the most gravely injured, saying last year that the system — as currently designed — could leave injured soldiers in poverty after age 65.
Those fiscal issues require "further due diligence," the government response said.
On Thursday, both opposition parties asked: What is the government waiting for?
"Has he no shame?" NDP veterans critic Peter Stoffer asked of Gill during question period. "These veterans and many others go without while they transfer a billion dollars back to the finance department for their useless tax schemes."
Liberal House veterans critic Frank Valeriote noted that government had no trouble spending $4 million on ads last spring to promote what it's doing with veterans.
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