Fixing Phoenix to cost billions

OTTAWA • A new federal report confirms the much-maligned Phoenix pay system has already cost taxpayers upwards of $1.1 billion and could cost up to $2.5 billion more to fix over the next five years.

The federal Comptroller General Roch Huppé, responsible for governmentwide financial management and internal audit, estimated Phoenix could take about five years to fix at a cost of $500 million annually.

But Carla Qualtrough, the federal minister of public services and procurement, told the National Post “it’s not going to be five years” until every public servant’s issues have been dealt with. Since the March snapshot that the report is based on, “I can tell you that things have changed operationally significantly,” she said, explaining how a new way of dividing the backlog has been rolling out over the past few months.

“We’ve noticed an incrediblechangebothinthe results and the ability to tackle the backlog, but also in the job satisfaction of the employees. Because it’s very hard. It’s kind of the weight of the world on the shoulders of those public servants who are trying to pay their fellow public servants,” said Qualtrough.

Since January there are 40,000 fewer cases in the queue, and in 18 months, based on the new approach, Qualtrough estimated that pay systems for about 25 per cent of the federal public service will be stabilized. “It’s going to happen on a rolling basis. It isn’t going to be all of a sudden tomorrow, whether that be two, three or four years from now.”

Another government official, who was not authorized to speak about the matter publicly, said there have been improvements to the current backlog of individual cases for the last 11 consecutive pay cycles. Public servants who are still waiting to have their cases reviewed should expect “constant improvement.”

The official blamed the previous Conservative government for handing their successors a “lemon” of a file — even though both governments made decisions that have contributed to what the Auditor General recently called an “incomprehensible failure.”

It was the AG, along with House and Senate committees, who requested the cost estimates, which the Treasury Board initially said would be available at the end of May but which weren’t put out until the Friday before the Canada Day long weekend.

Since its launch in February 2016 the Phoenix pay system has caused problems for the majority of Canada’s 300,000 federal public servants, from under- or overpaying them to botching their tax forms. These problems are not restricted to those working in the national capital region, but have affected workers across the country and even internationally.

The Conservative government initiated a plan to replace the old system, which was considered out-of-date and problematic, in 2009. That included consolidating management of public servants’ pay at a government office in Miramichi, N.B., instead of housing payroll specialists within individual departments. It was the Liberal government that delayed but finally went ahead with an initial rollout in February 2016 and, despite early problems, a wider implementation two months later.

The new system created by IBM was supposed to run more smoothly, and save about $70 million a year in operating costs. But today the annual costs are more than twice the $230 million per year it cost to operate the old pay system.

Last month the AG, Michael Ferguson, issued one of the most damning reports ever produced by his office. He concluded “the Phoenix project was an incomprehensible failure of project management and oversight,” blaming officials for pressing ahead despite clear problems with functionality, security and readiness. Testimony by IBM representatives at a committee this spring also revealed the company warned the government about problems well before the launch.

Ferguson’s report raised the ire of Privy Council Clerk Michael Wernick, who called it an “opinion piece” during committee testimony earlier this month. He complained it unfairly painted public servants as having a “generalized broken culture” that led to the Phoenix problems.

Huppé’s report does not include the potential costs of replacing Phoenix, with $16 million towards a “transformation” initiative announced in this year’s federal budget, “because its scope has not yet been determined, and it is being developed independently of the effort to stabilize Phoenix,” he wrote.

Qualtrough wouldn’t speculate on the timing of putting in a new system, but said the government has learned its lessons. “What we’ve learned is we will not shut off the old system until the new system is up and running, and we can prove beyond a reasonable doubt that people are going to get paid accurately and on time.”