Veterans Affairs Canada plans to cut more than $226 million from its budget in the next two years in what's expected to be the first wave of reductions in the department, according federal documents.

The department's plans and priorities report, which lays out spending up to 2014, shows compensation and financial support for ex-soldiers will see the biggest reduction.

The budget adjustment is long planned and matches the dwindling population of Second World War veterans.

A spokeswoman for Veterans Affairs Minister Steven Blaney says the individual benefits, including new measures for the most seriously wounded, will continue without change or interruption, but the country will have fewer veterans overall.

"There will be no cuts to benefits for our veterans," said Codi Taylor in an email.

"The reduction in planned spending indicated in the Report on Plans and Priorities is due to the anticipated reduction in program uptake. The reduction is related to the sad reality that the number of Second World War and Korean War veterans and survivors of 'traditional' veterans is declining."

The department's budget is roughly $3.5 billion a year.

Royal Canadian Legion opposes cuts

But like other arms of the federal government, Veterans Affairs is looking for savings beyond the planned $226-million reduction. The Conservatives' current program review wants to see existing spending in all departments and agencies slashed between five and 10 per cent.

The Royal Canadian Legion argued this week against any program review cuts, saying it accepts there will be fewer elderly veterans, but that the department is not taking into account the number of modern soldiers who will need services.

The most recently quarterly report from the Treasury Board, which tracks the federal budget, backs up the group's assessment. It shows compensation and financial support to veterans, in the current budget year, is running about seven per cent over what the department expected.

Veterans Affairs is forecast to spend $163.2 million more on disability awards and allowances because of a higher uptake in applications. The department is also expecting to hand out $10 million more in earnings-loss benefits than expected.

Taylor said if there are shortfalls in future, the department will ask the federal Treasury Board for a top up.

However, one of the things former veterans ombudsman Pat Stogran complained about last year was the reluctance of senior bureaucrats to ask the treasury for more money.

More money for memorials, monuments

Blaney himself recently acknowledged the need to cut expenses, but insisted former soldiers would not feel the impact and that reductions would be made through the unspecified elimination of red tape.

"What I hear [from] our veterans is that they're really seeking to simplify the process and I intend to address this issue very rapidly," Blaney said last week in restating the government's pledge to invest $2 billion in better benefits for soldiers over 50 years.

"What I can tell you is we're working to streamline the process and I'll be coming back to you with an update in the near future."

The budget planning report indicates the department will put more money toward memorials and monuments, but trim its outreach activities with veterans groups.

The Office of the Veterans Ombudsman will be spared the budget axe and the forecast doesn't anticipate any staffing reductions.

The Legion has called on the Harper government to exempt Veterans Affairs from the program review, the way the Obama administration has pledged not to touch its own programs in the U.S.