EI financing agency spends millions doing nothing

A federal agency created by the Harper government with great political fanfare in 2008 has become a bizarre bureaucracy all staffed up with nothing much to do.

A federal agency created by the Harper government with great political fanfare in 2008 is costing millions of dollars to achieve pretty much nothing.

The Canada Employment Insurance Financing Board has just about everything a budding government agency could want.

So far, it has spent over $3.3 million for new offices, computers and furniture, well-paid executives and staff, travel budgets, expense accounts, board meetings, and lots of pricey consultants.

All that's missing is a reason for it to exist at all.

Chairman David Brown: 'We haven't had to do nearly as much as our original mandate intended.' (CBC )

The Conservative government set up the agency ostensibly to perform three main functions.

The first was to set the annual employment insurance contribution rates that determine how much Canadian workers and employers have to pay into the EI fund in a given year.

But in all three years the board has been in existence, the Harper government has simply capped EI rates to spare Canadian workers from potentially huge premium increases.

As a result, the rate-setting agency has yet to set a single rate.


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The board's other main responsibility is to invest any surplus EI funds.

That has never happened, either.

Since the government started capping EI contribution rates, the employment insurance program has been running a deficit now totalling almost $9 billion.

There has simply never been a surplus dime for the board to invest.

Finally, the agency is charged with managing a $2 billion EI contingency fund the government promised to set up, but never did.

Not overwhelmed

In short, the board has no rates to set, no surplus to invest, no contingency fund to manage, and little chance any of that will change in the near future.

Executive director Phil Charko: about $150,000 a year to work part time. (CBC)

The chair of the agency, Toronto lawyer David Brown, admits the organization isn't exactly overwhelmed with work.

"We haven't had to do nearly as much as our original mandate intended us to do," Brown said in an interview.

"So we've slowed down on some of our development activities until it is clear that we are going to be able to do some of the things that we will be asked in the future."

The head of the Canadian Taxpayers' Federation is incensed.

"I think average taxpayers want to know what these people are doing with their time," Gregory Thomas tells CBC News.

"I think people need to call their MPs and let them know that they are tired of their money being wasted."

Raises for everyone

Mostly, the little agency that doesn't seems to have been keeping busy spending millions of dollars turning itself into a thoroughly modern bureaucracy.

Its published budget for the current year includes giving everyone raises, and moving the entire agency into new offices — all at an expected cost of $1.8 million.

Finance Minister Jim Flaherty tells Parliament about the new agency in 2008. (CBC)

Compensation costs include stipends and expenses for the seven appointed board members, and $244,000 for a couple of executives.

The agency's executive director, retired senior public servant Phil Charko, is being paid about $150,000 a year to work part time.

The budget provides another $200,000 to pay an investment manager if the agency ever has any money to invest.

Another $300,000 is budgeted for "additional corporate services such as IT  management, human resources management, and translation services."

'Improve corporate culture'

Despite so many having so little to do, the agency has earmarked over $250,000 to pay outside consultants, including public relations professionals to help produce the board's annual report showing what happened to all the money.

Finally, with two full-time employees on the payroll this year, the entire agency moved out of its former offices into larger space in a different building to "improve the corporate culture."

The total costs of the move are not shown in the agency's budget, although  it mentions an estimated $89,000 just for new furniture.

Board chair Brown says the move was mainly to create enough space to accommodate financial experts on a temporary basis as needed, even though they all have permanent desks in various federal government departments.

Aside from spending money, what the agency seems to do best is create  bureaucratic plans and policies for itself.

Fits in a minivan

Its planning report details many important "strategic priorities"  for this year, including implementing "the communication and outreach  strategy."

The agency's entire staff would fit into a minivan, but one of the  priorities this year has been to "develop and implement formal HR (human  resources) policies in such areas as staffing, staff relations and  training."

Finally, the agency with no real purpose wants to develop "measures of corporate performance."

All of which may leave ordinary Canadians wondering what the Harper government was thinking.

The Conservatives passed legislation creating the new agency in June of 2008.

For years, the EI fund had been running huge annual surpluses that mainly Liberal governments had simply siphoned off to help pay down the country's debt and other uses.

$8.8B in the red

The new agency's primary role was to eliminate those surpluses in future by setting the annual EI contribution rate at break even, taking in just enough revenue from workers and employers to cover unemployment benefits and any deficits in the fund.

Five months later, the economic crash caused unemployment to soar and EI  contributions to plummet.

By last year, the EI fund was swimming in $8.8 billion of red ink.

If the board had been allowed to exercise its mandate to set EI rates high enough to cover deficits in the fund, Canadian workers would have been hit with huge increases in annual employment insurance premiums.  Instead, the Harper government used its own powers to simply freeze EI premiums for 2010, and then capped increases to relatively minor amounts in subsequent years.

Thomas of the Taxpayers' Federation says the government should cut its losses.

"I think they have to fess up that things didn't work out, and it's a waste of money."

Alyson Queen, a spokeswoman for Human Resources Minister Diane Finley, says the government has no intention of scrapping "an important stewardship group that oversees the integrity and transparency of EI financing."

The agency, Queen says, "is operating in a fiscally responsible manner," and will someday be fully operational.

Greg Weston can be reached at greg.weston@cbc.ca