The problem-plagued Phoenix payroll system has already cost the federal government more than $1 billion and could require an additional $500 million a year until it is fixed, based on the government’s latest estimate made public Friday.
The majority of future spending is being described as “unplanned” costs and doesn’t include more than $120 million in expected, one-time expenses to stabilize the system that has left countless public servants overpaid, underpaid, or not paid at all.
The government’s best estimate is that it could take five years to stabilize the pay system so that public servants are reliably paid and don’t have to worry about being “Phoenixed.”
Public Services Minister Carla Qualtrough said she expects the actual costs to be lower given some improvements and pilot projects the government is implementing.
She said the figures in the report are a snapshot from March 2018 and much has changed since then.
“There are so many moving parts on this (that) I’m hesitant to say, yes that’s what it’s going to cost and that’s how long it’s going to take because I think we’re going to do it sooner,” Qualtrough said.
The previous Conservative government estimated replacing the previous pay systems with Phoenix would save taxpayers roughly $70 million annually by requiring fewer people to work on pay files. But the total cost as of the end of March was almost $1.1 billion — more than three times the original projected cost of $309.2 million for the system, according to figures in the report.
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.”
Conservative critic Tony Clement said he had little confidence that the Liberals could fix Phoenix at a cost below the estimates in the report. The lack of a workable repair plan has left taxpayers on the hook for billions and federal workers turning to their MPs for pay help, he said.
“Unfortunately, that’s the place that we’re in right now — putting Band-Aids on this leaky ship and hopefully that will at least reduce the pain that public servants are feeling.”
The spending estimate doesn’t include a full accounting of compensation for employees’ out-of-pocket expenses, such as late payment penalties, that unions are waiting for the government to act on.
Federal workers have stayed on the job despite missing paycheques — which the Public Service Alliance of Canada will highlight in a national ad campaign launching Canada Day — but may not continue to do so. Some 140,000 workers represented by PSAC, including border agents, food inspectors and tax officials, will be in contract talks this fall.
“They better come with an offer that demonstrates their appreciation and their understanding of the commitment and dedication of our members to go in to work day-in and day-out not knowing whether they get paid or not. I’m not too sure what other sectors you would find that in,” said PSAC president Chris Aylward.
“If we don’t see a respectful offer from this government, then certainly part of the bargaining process of course that we have is to withdraw our services.”
The Liberals have budgeted $16 million over two years to find a replacement for Phoenix. Once the backlog of issues is dealt with and pay information is flowing properly into the system, the Liberals expect to transfer everything to a new pay platform.