Parliament Hill in Ottawa, where many federal government departments are headquartered.

The Canadian government has announced plans to replace the beleaguered Phoenix pay system, blamed for making errors in calculating the pay of tens of thousands of public servants.

It has committed to spend CAN$16m (US$12m) over the next two years on looking for a replacement for the computerised pay system, while also setting aside CAN$431.4m (US$335m) over six years to rebuild or replace the system and sort out the backlog of pay problems.

A further CAN$5.5m (US$4.3m) will be paid to the Canada Revenue Agency over the next two years to cover the cost of sorting out tax issues for public servants whose finances have been affected by Phoenix.

A problem shared

The decision to fundamentally rethink the troubled shared service system was unveiled in the Liberal government’s 2018 budget, which was tabled in the House of Commons on Tuesday. Counting the CAN$460m (US$360m) already spent on sorting out the problems created by Phoenix, the new spending brings the total allocated to replacing Phoenix – and clearing up after it – to CAN$912.9m (US$710m).

The budget states that the administration intends to “eventually move away from Phoenix and begin development of the next generation of the federal government’s pay system,” the Toronto Star reported.

In April, the government will start work “on a way forward on a new pay system” in consultation with technology providers, pay system experts and public service unions, the Budget declares.

Let’s start again

Carla Qualtrough, minister of public services and procurement in the Canadian federal government (Image courtesy: EronMain).

The document also states that the new investment will bring the total number of pay centre employees working on pay issues to more than 1,500, compared with the 550 employees who were meant to handle all pay issues when Phoenix was launched, CBC News reported.

The move was welcomed by the Canadian Labour Congress and the Professional Institute of the Public Service of Canada. PIPSC called for Phoenix to be scrapped last November, claiming its members could build a replacement system in a year.

“It’s the first time there’s been a genuine commitment to building an alternative,” said PIPSC president Debi Daviau on Tuesday, the Toronto Star reported. The union was open to working with the private sector “in limited ways” to ensure a new pay system could be set up and tested as quickly as possible, she added.


An inherited problem

The announcement came after Carla Qualtrough, the public services and procurement minister, issued an apology for the trouble caused by Phoenix on behalf of the federal government in the House of Commons on Monday.

Qualtrough also defended the Liberal government’s decision to launch the pay system, blaming the previous Conservative administration for leaving it no choice because the previous system had been “decommissioned” and its compensation advisers fired.

Troubled history

Debi Daviau, President of the Professional Institute of the Public Service of Canada (Image courtesy: @PIPSC)

Public servants have faced problems with pay since the computerised system was launched two years ago, with some underpaid and some paid late or not at all. Others have been overpaid, leading to complications when paying tax.

Phoenix was meant to save the government CAN$70m (US$54m) per year, but within 18 months flaws in the system had produced outstanding pay issues totalling CAN$520m (US$400m) that affected 150,000 public servants, according to a report by Canada’s Auditor General.

In October 2016, Clerk of the Privy Council Michael Wernick told Global Government Forum that problems in introducing the system represented a “collective clanger”. And in January, the government was forced to step in with a package to minimise the harm suffered by officials who’d received incorrect payments.

Protest rallies were held on Wednesday in at least a dozen cities across Canada to mark the second anniversary of the launch of Phoenix, attracting thousands of federal public servants.

A version of this article first appeared on our sister publication Global Government Forum
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