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EI for self-employed costs $40M to administer, pays only $21M in benefits

How much is a campaign promise worth? A 2008 Conservative pledge to allow self-employed workers to take maternity and parental leave led to administration costs nearly double the value of the benefits actually paid out to parents.

Conservatives brought in maternity, parental leave for self-employed workers, but it wasn't very popular

Conservative Leader Stephen Harper continues to pitch his party's platform at families in 2015. A 2008 campaign pledge to extend maternity and parental leave benefits to self-employed workers turned out to be far less popular than expected. (Paul Chiasson/Canadian Press)

Can campaign promises cost more than they're worth? 

A document obtained by CBC News under Access to Information suggests Stephen Harper's Conservatives have discovered the cost of delivering a new program that turns out to be less popular than expected.

Administering maternity and parental leave for self-employed workers through the employment insurance system cost taxpayers double the value of the benefits actually paid out, according to a briefing book prepared for Employment Minister Pierre Poilievre. 

Extending EI's special benefits to self-employed workers was part of the 2008 Conservative election platform, which made a deliberate pitch to female voters and young families with offers like that.

The day he he announced it, Harper said his government had consulted with entrepreneurs and small business people and heard that it was "unfair" that they couldn't take maternity leave the way salaried employees could. 

(In Quebec, benefits had been available for self-employed workers since 2006.)

The program was voluntary. It was intended to be mostly self-financing through the EI premiums paid by those who wanted to join. In other words: a cheap platform plank.

Half a million to join?

Today, EI's special benefits are available for not only maternity and parental leaves, but also leaves for sickness, compassionate care and care of critically ill children. (The vast majority of the claims are maternity and parental leaves for women.)

Self-employed parents could opt in starting in 2010, with the first benefits payable in 2011. 

The government estimated between 300,000 and 500,000 would sign up. By 2014, officials were projecting 55,000 claims would be submitted annually.

Stroller-pushing and baby-kissing photos were part of a family-friendly image the Conservatives marketed during the 2008 campaign. (Paul Chiasson/Canadian Press)

In fact, just 14,394 self-employed workers opted in, making 2,316 claims between 2011 and the end of March 2014, according to the most recent report. Those claims were worth $21.1 million in benefits.

Poilievre's briefing reveals the cost of administering the program between 2009-10 and 2013-14 was expected to be $61 million for Employment and Social Development Canada (ESDC) and $26.2 million for the Canada Revenue Agency (CRA).

After so few people signed up, the actual spending on administrative costs by ESDC over that five-year period was lower than the original estimate. However, it still added up to $39.6 million, the briefing said.

That means so far, the bureaucracy working on the program in Poilievre's department has cost taxpayers nearly double the value of the $21 million in benefits paid out to the self-employed workers who signed up.

Why didn't more opt in?

Several factors may contribute to the program's lower-than-expected popularity.

Do enough people know benefits are available? ESDC continues to promote them on its website.

Then there's the design of the program itself.

During the campaign, Conservatives said workers would have to pay premiums for at least six months to qualify. 

But the program implemented in 2010 required 12 months of contributions before taking leave. Anyone who hadn't planned for a nine-month pregnancy in advance hadn't paid premiums long enough to be eligible.

Since 2010, about $21 million in benefits, including those for maternal and parental leaves, have been paid out to self-employed workers who opted in to the EI system. Administration costs for those workers, however, are nearly double that for the same time period. (Paul Chiasson/Canadian Press)

Earning any income from a business while on leave could result in a clawback of the already-modest benefits: 55 per cent of average weekly earnings, up to a maximum of $524 weekly in 2015.

Average weekly earnings are calculated based on the previous calendar year, not the 12 months immediately preceding the leave. That lowers the benefits payable for some who may be new to self-employment, recently in school or previously earning less (or no) income. 

Once leave is taken and benefits paid, individuals have to keep paying EI premiums for as long as they remain self-employed.

For those who intend to remain self-employed indefinitely, it could be cheaper over the long run to simply make do with less income for that maternity leave.

Review 'not yet complete'

"Given the lower take-up than anticipated and based on revised projected volumes of participants and claims, ESDC is adjusting its request for ongoing funding," the minister's briefing reads.

The program is up for statutory review five years after coming into force.

A final report on this evaluation was planned for the end of 2014-15, according to the briefing note, which suggests it should have been complete by last spring.

However, in an email response to CBC News on Friday, a departmental spokeswoman said "this evaluation is underway and not yet complete."

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