Phoenix pay system ‘fiasco’ could cost $2.2B, says study

Senate committee attributes system’s failures largely to culture of avoiding responsibility

OTTAWA — The pay “fiasco” affecting federal government employees was largely the result of a bureaucratic culture of avoiding responsibility that will require closer political oversight before launching similarly complex projects in the future, says a Senate study of the Phoenix pay system.

The system, brought online more than two years ago under the intention of streamlining pay for the government’s nearly 300,000 workers and saving taxpayers $70 million per year, has instead cost nearly $1 billion in unforeseen expenses.

The total price tag could reach $2.2 billion by 2023, says a report from the Senate’s national finance committee.

The report released Tuesday called on Parliament to become more involved in overseeing planned fixes to Phoenix, and what the government is developing to replace it.

“The Phoenix disaster has revealed a cultural problem within the management of the federal bureaucracy, a problem that we have to address if the government is to successfully undertake complex projects such as this one in the future,” said report co-author and committee deputy chair Sen. Andre Pratte.

The report noted that “no one has accepted responsibility for the failure of Phoenix or has been held to account.”

But rather than pointing a finger at individual senior bureaucrats for the pay system’s failures, the committee blamed in large part a “fundamental management cultural problem within the public service” for the Phoenix fiasco.

“The government needs to move away from a culture that plays down bad news and avoids responsibility to one that encourages employee engagement, feedback and collaboration,” said the report.

The Senate committee’s report amounts to more bad news for the public service that has taken a beating on its handling of Phoenix, including a war of words between the federal auditor general and the clerk of the Privy Council.

In May, Michael Ferguson called Phoenix an “incomprehensible failure” resulting from “an obedient culture” in the public service. Weeks later, Privy Council clerk Michael Wernick fired back, accusing Ferguson of “sweeping generalizations” about public servants and calling Phoenix “repairable.”

“Under the new system and the Veterans Well-being Act — the one that’s in place right now — benefits are only paid starting at the date of decision,” he said.

One of the biggest challenges in the department, he said, is that there’s a significant backlog of applications, which leaves veterans waiting to be reimbursed.

“Some of them are not accessing treatment and could cause further deterioration to their health and wellness,” he said.

Veterans Affairs Minister Seamus O’Regan said in a statement that the department does authorize and reimburse rehabilitation benefits, including mental health treatment, before the claim is adjudicated.

“Is there more to do? Yes, and that’s why we remain focused on the outstanding items in the mandate letter,” he said, referring to the set of minister’s instructions given to him by the prime minister when he was named to cabinet.

Another recommendation encourages the Liberal government to amend the Veterans Wellbeing Act to allow a single

Canadian Armed Forces member with no dependent children to designate a family member to apply for and receive the death benefit.

Parent said many young soldiers died serving in Afghanistan, but those soldiers’ parents or siblings were their caretakers, and therefore they should be entitled to the death benefit. Currently, the benefit is available only for spouses.

Parent says he will keep a close watch on the government’s actions and the remaining recommendations.

“Throughout my 10 years, I’ve seen certainly an effort to make things better and I’ve seen that with successive governments and successive ministers,” he said.

But an important change that’s needed in Veterans Affairs Canada, added Parent, isn’t in his report that deals strictly with recommendations.

“Even more than a challenge, but a big problem, is communications,” said Parent, adding, “I think a lot of veterans and their families would be probably more comfortable if there was more information, more transparency from the department.”

Parent said VAC needs to better explain to veterans and their families how programs are being

regulated as well as the criteria necessary to access services.

The ombudsman’s office receives between 5,000 to 6,000 calls a year from veterans or family members seeking assistance, complaining that they’re having difficulty accessing benefits or that they’re not being treated fairly, said Parent. His office acts on about 1,700 cases a year.

“Every year we get upward of 1,700 cases, personal complaints . . . we assist people and negotiate with Veterans Affairs Canada to get the solution to their problem, and from that we draw these recommendations. “It’s a very complex department.” O’Regan said his department is also renewing the way it communicates with veterans to ensure programs and services that are designed to support their wellbeing. The 2017 federal budget invested $22.4 million over three years, starting in 2017-18, in a communications and outreach strategy to help inform veterans and families of supports and services available to them, he added.

Phil McColeman, Conservative critic for veterans affairs, said the report card indicates that the Trudeau government has failed to respond to the ombudsman’s recommendations.