New figures show the country's three major national security institutions were collectively unable to spend $11 billion of their budgets over the last eight years.

The statistics on lapsed funds at National Defence, the Canadian Security Intelligence Service and the RCMP were presented today at the annual Conference of Defence Associations Institute meeting, which also heard a renewed warnings that the military is on the verge of a major equipment rust out.

The numbers stand in contrast to the rosy assessment of the Harper government's defence spending record as presented by Jason Kenney, the newly appointed minister.

Kenney dismissed the argument over lapsed funding, saying all departments do it as part of the normal budget process, an explanation the government used last year when it was revealed Veterans Affairs gave back $1.13 billion in unspent cash.

'Departments don't blow out their budgets': Kenney

"Every department lapses funds every year. And they always have, and they always will," Kenney told reporters.

"Departments don't blow out their budgets. That's irresponsible fiscal management. Departments submit budgets always with a little margin for error on the high side and they always have carry forward provisions."

National Defence has lapsed $9.7 billion since 2007. The RCMP has handed back $1.7 billion and CSIS was unable to spend $180 million.

By law, departments are supposed to hand back unspent cash to the federal treasury, but as Kenney noted they are able to carryover a small amount to the next budget year, under certain conditions.

He underscored how the defence budget has grown in real-terms from just under $14 billion when the Conservatives took office in 2006 to just under $20 billion today.

But analysts, notably Dave Perry of the defence institute, says the corrosive effect of inflation is not factored into the government's statements and prior to 2001 departments were regularly able to spend their allocations.

In addition, there has been spending restraint brought on by the desire to balance the budget.He says public accounts records show spending is down by 13 per cent at defence, seven per cent at CSIS and by 20 per cent with the RCMP.

Defence 'still trying to make up for a lost decade of recapitalization': expert

Perry said Kenney is correct that in absolute dollar terms budgets are bigger, but they are able to do less because of past decisions.

"The post 9-11, Al-Qaeda terrorist threat has evolved into the current ISIS threat, DND is still trying to make up for a lost decade of recapitalization during the 90's, and we're once again engaged in a military mission overseas," he said.

"So, the real issue isn't really how much the budget situation has changed, but whether these organizations have the funds to do what the government is asking them to, or not. If they don't, we either need to ask them to do less or provide them more."

Kenney also said the Conservatives have delivered the "most impressive re-equipping of our military in the post-war period."

But in a report presented to the conference Thursday, researchers with the defence institute noted that capital spending on the military has declined for the last four years to the point where 25 per cent of funds budgeted for new equipment went unspent.

"Today, capital spending is now approximately 14 per cent of defence expenditures, the lowest level of capital spending since 1977/78," said the analysis penned by Ferry De Kerckhovee, a senior fellow at the University of Ottawa's school of international affairs.