Phoenix pay system mess could cost $1 billion more


It’s a mistake that has lasted through two prime ministers and has cost billions of dollars. And it’s about to cost a billion dollars more to fix.

The Phoenix pay system was started during the Stephen Harper years. And now it’s Prime Minister Justin Trudeau’s problem.

Both governments have mismanaged the situation so badly that experts now say it will cost taxpayers over $1 billion to repair.

A story from The Canadian Press puts it this way:

“A newly released federal report estimates the problem-plagued Phoenix payroll system has already cost Canadian government coffers more than $1 billion and could require an additional $500 million a year until it is fixed.

“The majority of future spending is being described as “unplanned” costs and doesn’t include more than $120 million in expected, one-time expenses.

“The report says the government’s best estimate is that it could take five years to stabilize the Phoenix pay system.” 

And there’s more. According to Global News, Deputy Minister of Public Services and Procurement Canada, Marie Lemay, has confirmed executives overseeing the beleaguered system were paid just short of $5 million in bonuses. The bills just keep coming.

“Executives in the department overseeing the beleaguered Phoenix pay system received just under $5 million in “performance pay” over the past year, even as thousands of public servants were dealing with ongoing pay problems,” Monique Scotti, political reporter for Global News, wrote last April.

“According to documents tabled in the House of Commons this week in response to a written question from Conservative MP Kelly McCauley, the $4,827,913 was divvied up between 340 executives at Public Services and Procurement Canada (PSPC),” Scotti’s story continues. “The average performance payment for the 2015-16 fiscal year was $14,199.74.”

In other words, the problems with the Phoenix pay system continue and the bills keep piling up.

The Phoenix pay meltdown has resulted in tens of thousands of federal government employees being overpaid, underpaid or — in a few hundred cases — receiving no pay at all. Most performance pay went out in December 2016.

According to the government’s disclosure in the House back in 2017, most of the $4.8 million in performance payments at PSPC were deposited on Dec. 14 and Dec. 28, 2016, respectively, although the total covers all payments made between April 1, 2015 and March 31, 2016, the Global News story says.

So while the government’s employees continued to suffer, the bureaucrats charged with fixing the system that caused that suffering were lining their pockets.

Last month, auditor general Michael Ferguson lambasted how federal officials handled the implementation of Phoenix, saying it was an “incomprehensible failure” of project management and oversight that led to green-lighting a system that wasn’t ready. Ferguson blamed “an obedient culture” in the public service to explain why no one raised red flags. 

Privy Council clerk Michael Wernick defended the bureaucracy weeks later, accusing Ferguson of making “sweeping generalizations” about public servants and calling Phoenix “repairable.”

Sure, blame the auditor general for pointing out the disgusting failure the Phoenix pay system has become. Maybe, it’s time the government – all of the government, including opposition members – started thinking about how they are going to fix this problem for good, instead of looking at which direction to point their fingers for the mistakes.

Wikipedia describes the Phoenix pay system this way: “The Phoenix pay system is a payroll processing system for Canadian federal government employees, run by Public Services and Procurement Canada. After coming online in early 2016, Phoenix has been mired in problems with underpayments, overpayments, and non-payments.” 

Then Wikipedia goes into the history of the mess: “Phoenix was originally planned in 2009 by Public Works to replace the federal government’s 40-year old pay system. At the same time, the government hoped to centralize payroll employees in one place, as opposed to having them scattered throughout individual departments. The hope was that a new, more centralized and automated system would lower labour requirements and reduce costs. The set-up costs of the system at that time were estimated at $310 million, with the system coming online in 2015. The system was expected to save $78 million a year. In August 2010, the Prime Minister of the time, Stephen Harper, announced that the new pay system would be located in Miramichi, New Brunswick, as compensation for the closing of the long-gun registry centre in that city. In June 2011, IBM won the contract to set up the system, using PeopleSoft software; the original contract was for $5.7 million, but IBM was eventually paid $185 million.”

And the problems with the system just kept getting worse from there to the point where it could cost taxpayers $1 billion more before it is finally put to rest.

Who’s to blame? That’s even more difficult to pin down. Wikipedia puts it this way:

There have been several causes put forward for Phoenix’s problems. Government managers have blamed the lack of training for employees, particularly those in the new Miramichi pay centre. Federal unions have blamed IBM, drawing comparisons with the 2010 Queensland Health payroll problems, which also involved IBM, and eventually cost $1.2 billion. The former Conservative government has been blamed for cutting employees too quickly and under-spending on training. The Liberal government has been blamed for rolling out the system too quickly and ignoring warning signs.

So you can blame Stephen Harper or Justin Trudeau, the Conservatives or the Liberals, the people charged with setting up the system or the people currently charged with fixing it. But the Phoenix pay system is just another example of government bungling. And that bungling is going to cost us a pile of money to fix.


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