Auditor General Michael Ferguson arrives to hold a news conference at the National Press Theatre in Ottawa on Tuesday regarding his 2017 Fall Report. (Sean Kilpatrick/The Canadian Press)

Cost to fix Phoenix pay system to surpass $540 million: auditor general

Michael Ferguson’s review hints the entire system should be scrapped

The federal government’s chronic salary struggles could be on the verge of ballooning into a billion-dollar boondoggle, the auditor general says in a scathing review that hints the entire system should be scrapped.

Michael Ferguson’s review of the disastrous Phoenix pay system reveals just how many and how often public servants are either being overpaid and underpaid, how little headway federal officials have made to correct the mistakes, and how the government under-reported the number of outstanding pay problems even as issues continued to grow.

In all, there were 150,000 employees with pay problems that needed correcting at the start of summer, and a value of over $520 million worth of mistakes — almost as much as the government initially believed it would cost to fix Phoenix.

And that number — $540 million — is likely well below what it will ultimately cost, Ferguson concludes.

The Liberal government can’t assure Canadians about when the pay problems will end or how much it will ultimately cost to get a system that “comes close to its original goal,” said Ferguson, who makes a point of citing a similar problem in Australia that took seven years and $1.2 billion to resolve.

Canada, he warns, is in the same ballpark.

And while he doesn’t say what the government should ultimately do, his auditors recommend the government look at all options, including whether it might be better for the Liberals to ditch the system entirely.

The government has agreed to provide Parliament with a full and detailed cost estimate, but not until next May, with plans to finalize by next month a preliminary roadmap of dozens of projects aimed at fixing Phoenix.

Phoenix was not the only issue Ferguson identified in his latest tranche of audits:

— Callers to the Canada Revenue Agency got the wrong answer to their questions 30 per cent of the time, well above the 6.5 per cent error rate that the agency publicly reports — and that’s only when they were able to actually get through to an employee; only 30 per cent of calls placed by auditors were connected.

— Immigration, Refugees and Citizenship Canada didn’t monitor whether Syrian refugees were being properly integrated into Canadian society, including basic information such as how many children were enrolled in schools.

— Health Canada couldn’t say whether its oral health program for First Nations and Inuit children helped in any way.

— Female offenders weren’t getting the rehabilitation they needed, especially those with mental illnesses; some prisoners with severe impairments or at risk of suicide continue to be held for observation in segregation cells, against the advice of experts.

— Cadets at the Royal Military College were being academically challenged, but the school didn’t ensure they learned proper military conduct, ethics or adequate leadership skills.

Combined, the audits amount to what Ferguson describes as a bureaucratic focus inward, rather than thinking about the people they are there to serve. It’s a message that Ferguson has delivered before, but that the government has yet to hear, he said.

“When I look at these audits together, I find that once again, I’m struck by the fact that departments don’t consider the results of their programs and services from the point of view of the citizens they serve,” he said in a statement.

That message appeared to ring loudest in Ferguson’s review of Phoenix, which the Liberals themselves requested last year. The IBM-designed Phoenix system, a project originally embarked upon by the government’s Conservative predecessors, was supposed to save $70 million a year by modernizing, consolidating and centralizing pay processing.

Instead, the government has had to hire hundred of experts to deal with a relentless barrage of pay problems that don’t seem to be getting fixed. The Senate has decided to pull out of Phoenix, and departments and agencies have had to implement workarounds to make sure employees get paid.

Statistics Canada, for instance, kept its old pay system in place for the army of temporary workers hired for the 2016 census.

The Liberals expect to spend $540 million to fix the system that cost $310 million, but Ferguson warned that figure is likely to climb even higher, going so far as to warn about similar problems in Australia that have ended up costing the government $1.2 billion over seven years.

Ferguson only looked at what happened since the Liberals took office. An audit about what went wrong in the lead-up will be released in May.

The Liberals green-lighted the new system shortly after coming to office, despite concerns from officials that it wasn’t ready to handle the 80,000 different rules overseeing issues like parental leave or compensating those in temporary supervising roles, known as acting pay.

Acting pay makes up one-quarter of all outstanding pay issues — a queue that as of the end of June sat at 494,500, the report says, or about five times what it was when Phoenix launched in early 2016. About 49,000 employees have waited more than a year to have their pay issues resolved.

In the last fiscal year that ended in March, some 62 per cent of employees sampled were paid incorrectly at least once, the report found.

The causes of pay problems were myriad, including pay experts who couldn’t enter data into the system half the time to fix errors because doing so would cause further mistakes.

Even as the backlog of cases grew, the report says that the government under-reported the numbers by about 30 per cent because it excluded requests that didn’t have a dollar value, or that it didn’t believe would take a lot of time to process.

The report says that the government has set aside a lot of time, money and bodies to deal with Phoenix, but it hasn’t addressed any of the underlying causes or developed a long-term sustainable solution.

Jordan Press, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Red Chris, Tahltan collaborate on COVID-19 safety

Mine continues to operate with several new measures aimed at stopping spread of virus

Closures and cancellations in the Bulkley Valley due to COVID-19

Many places and businesses have closed or reduced their hours

School district #54 works on school plan

School district officials and teachers are this week communicating plans to resume… Continue reading

UPDATE: Man drowns crossing Skeena River

59-year old Prince Rupert victim pronounced dead at Mills Memorial

Better COVID-19 testing results needed in the north

Former senior Northern Health official also wants work camps shut down

B.C. couple celebrates 61st anniversary through seniors’ home window

Frank and Rena Phillips marked occasion at Nanaimo Seniors Village this week while social distancing

A look at some of the B.C. inventors creating life-saving tools in fight against COVID-19

Groups across B.C. are working together to create what they hope will help people affected by the pandemic

Association launches French-language games, online tools for families learning at home

Games, culture and vocabulary included in new virtual resources

‘There can be no ambiguity’: Travellers brought home to B.C. must self-isolate

Health Minister Adrian Dix said the mandatory isolation must be abided by

55+ BC Games cancelled amid COVID-19 concerns

Greater Victoria set to host 2021 event

BC Hydro offers three-month bill ‘holiday’ for those affected by COVID-19

Industrial customers can defer half of their power bills

Some April Fool’s Day jokes bring much-needed laughter; others tone deaf to COVID-19

Police are warning the public not to use the ongoing pandemic as a punchline

Canada’s 75% wage subsidy is coming, but not for several weeks: finance minister

Subsidy will cost Canada $71 billion, but push down cost of emergency benefit, Morneau said

Call before you dig into spring projects during isolation: BC 1 Call

BC 1 Call gives free checks for utilities in the area of a desired outdoor project

Most Read