The Department of Veterans Affairs is planning to cut over $222 million from its budget over the next two years, a move that some believe will have a huge impact on employees in Charlottetown.
The cuts are outlined in the department's plans and priorities report, which details spending and programming plans up to 2014.
The biggest budget reductions will be in compensation and financial support for ex-soldiers.
The report discusses "significant demographic shifts in the Veteran population," with many Second World War and Korean War veterans passing away while new, younger vets are emerging from current conflicts with challenges much different than the department has traditionally tackled.
"This document forecasts a reduction of spending," Veterans Affairs spokesperson Janice Summerby wrote in an email to The Guardian.
"The sad reality is that the number of Second World War and Korean War veterans and survivors of "traditional" veterans is declining and we anticipate a corresponding decrease in the number of this group who will be accessing benefits from Veterans Affairs Canada."
While no staffing reductions are mentioned in the report, some believe this will be the inevitable next step.
The current cuts don't include those that will come from the Harper government's current Strategic Operating Review that is looking to slash five to 10 per cent of spending in all departments and agencies.
The VAC's budget is roughly $3.5 billion a year.
Charlottetown MP Sean Casey said Monday he believes the current cuts will have a negative impact for employees of the Veterans Affairs headquarters in Charlottetown.
"This is really bad news," Casey said in an interview. "Charlottetown will be impacted. No question about it."
He said the buzzword "transformation agenda" has been circulating within the department, referring to a decentralization of services from the Charlottetown offices into individual military bases.
"They deny to me that ‘transformation agenda' is code for cuts... but what that means is, we're going to be seeing less in Charlottetown and more on the military bases across this country, so big changes are afoot for Veterans Affairs Canada under this government," Casey said.
"I'm extremely concerned that we're going to see a significant downsizing in the short to medium term at Veterans Affairs headquarters."
No one from the federal department was made available to The Guardian for an interview, but an email response did mention a commitment to the Charlottetown headquarters.
"The department will continue to ensure it has the right people with the right skills in the right places to meet the needs of veterans of all ages. That includes maintaining its important presence in Charlottetown," Summerby wrote.
Liberal P.E.I. Senator Percy Downe echoed Casey's concerns.
Downe pointed out that at least one VAC job was already moved out of P.E.I. when the director of communications position was recently transferred to Ottawa.
He believes this is just the beginning of other jobs that will be either cut or moved out of P.E.I.
The VAC employs over 1,300 people, mainly at the headquarters in Charlottetown, with a payroll of over $100 million.
"You take that $100 million payroll and you reduce it significantly on P.E.I. and you're affecting everything from tickets for the Rocket hockey game to restaurants to car and housing sales," Downe said.
"This would have a tremendous impact on the P.E.I. economy."
The department said none of its planned spending reductions would negatively impact veterans or their families.