The department that delivers programs for Canada's indigenous people has held back more than $1 billion in promised spending for social services over the last five years.

That significant level of so-called lapsed spending — money promised but never spent — places Aboriginal Affairs among the largest "serial" offenders, that is, key departments that regularly spend less than budgeted in big dollar amounts year after year.

The other "serial" lapsers in a top-seven list compiled by the Privy Council Office failed to spend all their budgeted money for infrastructure and procurement, including National Defence, while Aboriginal Affairs stands out as the only social-service department regularly falling so short of budget.

Cindy Blackstock

Advocate Cindy Blackstock has launched a legal challenge, saying First Nation children are not getting their fair share of federal support for education and social services. (CBC)

A heavily censored analysis of lapsing behaviour was obtained by CBC News from the Privy Council Office, the prime minister's department, under the Access to Information Act.

Other social-service departments have made headlines in recent months for significant dollar shortfalls in promised spending, including Veterans Affairs, which has underspent by $1 billion over a decade and Employment and Social Development Canada, which lapsed almost $100 million in 2013-14 alone.

But only Aboriginal Affairs — with a budget of about $8 billion, not all of it discretionary — made the internal list, created Nov. 28 for Privy Council Clerk Janice Charette.

Trend of higher lapses

The Parliamentary Budget Office and others say some lapsed spending is to be expected each year, as programs are delayed, procurement hits snags and construction timelines lengthen. But the internal analysis for Charette says there has been "a trend of higher lapses in recent years," and calls underspending at the top seven departments "significant in magnitude."

In 2012-13, as the government's sweeping deficit-reduction cuts began to bite, total lapsed money hit a record $10 billion for all departments and agencies, or more than one of every 10 dollars budgeted, the analysis found.

Budgeted dollars not spent are 'significant in magnitude.' — Internal report for Janice Charette, clerk of the Privy Council

Before the Conservatives formed government in 2006, annual lapsed spending was steady at about five per cent, but it began to increase sharply in the years following, spiking at more than 10 per cent in 2012-13, the total fell to 7.7 per cent in 2013-14. (The most recent number, for 2014-15, will be reported in the Public Accounts in the fall.)

The calculation excludes federal spending on mandatory programs, such as transfers to the provinces, and includes discretionary spending voted on each year by Parliament.

The analysis says Veterans Affairs is an average lapser, with about five per cent of its budget unspent in recent years, which therefore "demonstrates prudent financial planning" by that department.

The king of the lapsers is Infrastructure Canada, with an average of $1.5 billion unspent each year. The heavily censored document contains an explanation that is mostly blacked out.

Aboriginal Affairs underspends by an average of $218 million each year.

'Timing issues' cited

A spokeswoman for Aboriginal Affairs took issue with the Privy Council Office analysis, saying most of the lapsed funds are "carried forward" to be used in coming years.

"From 2009-10 until 2013-14, 97.2 per cent of what was marked as lapsed funding in the public accounts has actually been carried forward to future years and spent on a wide range of programs," Valerie Hache said in an email, which did not include any accounting of the rollovers.

"The reprofiling is simply due to timing issues that are common in complex negotiations where a number of parties are involved."

The Privy Council Office analysis concludes that in future years "the existence of a lapse in the five per cent range is likely to persist" across all of government. "Such a result should not be perceived as problematic."

New Democrat MP Niki Ashton, aboriginal affairs critic, said the repeated underspending of millions of dollars is "unconscionable," given the appalling living conditions on reserves today.

"This government chose, in silence, to re-pocket it instead of spending it on people who not just need it but people for whom they have a fiduciary obligation," she said in an interview.

The Truth and Reconciliation Commission this week called for significantly more resources to help First Nations survivors of residential schools recover from generations of horrific physical, sexual, emotional and mental abuse at the hands of church and government workers, damaging virtually every indigenous family in Canada. No concrete commitments have been made.

The planned budget for Aboriginal Affairs is to shrink by a billion dollars by 2017-18 from current levels, to $7 billion, according to the department's fiscal blueprint tabled earlier in the spring.

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