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)

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

Just Posted

Cpl. Scott MacLeod and Police Service Dog Jago. Jago was killed in the line of duty on Thursday, June 17. (RCMP)
Abbotsford police, RCMP grieve 4-year-old service dog killed in line of duty

Jago killed by armed suspect during ‘high-risk’ incident in Alberta

Holger Schwichtenberg and his son Philip talk in the barn of the 150-acre Schwichtenberg farm. This farm is one of many throughout B.C. that support more than 12,500 jobs across the province in the dairy industry. (Contributed Photo/B.C. Dairy Association)
Agassiz dairy farm a model of care for environment, animals, and family

Farm is part of a dairy sector centred in the Fraser Valley, supporting 12,500 jobs province-wide

Kalyn Head, seen here on June 4, 2021, will be running 100 kilometres for her “birthday marathon” fundraiser on July 23. (Jenna Hauck/ Chilliwack Progress)
Woman’s 100-km birthday marathon from Chilliwack to Abbotsford will benefit Special Olympics B.C.

Kalyn Head hopes run raises awareness, advocates for inclusion of people with intellectual disabilities

The Great Gordini puts on a magic show for an avid audience during the first Storytime in the Park in this 2019 photo. (Grace Kennedy/The Observer)
Storytime in the Park returns this summer

Day 1 registration is on June 30

Dancers from the Sts’ailes First Nation perform the eagle dance at a welcome banner dedication ceremony on Thursday, June 10. “Ey Swayel” is a Halq̓eméylem term translated as ‘a good day.’ (Adam Louis/Observer)
VIDEO: ‘A good day’ for Agassiz school as Sts’ailes welcome banner is dedicated

Banner hangs above the school’s entrance, welcoming students, staff and visitors

Marco Mendicino, Minister of Immigration, Refugees and Citizenship during a press conference in Ottawa on Thursday, May 13, 2021. THE CANADIAN PRESS/Sean Kilpatrick
Canada to welcome 45,000 refugees this year, says immigration minister

Canada plans to increase persons admitted from 23,500 to 45,000 and expedite permanent residency applications

Emily Steele holds up a collage of her son, 16-year-old Elijah-Iain Beauregard who was stabbed and killed in June 2019, outside of Kelowna Law Courts on June 18. (Aaron Hemens/Capital News)
Kelowna woman who fatally stabbed teen facing up to 1.5 years of jail time

Her jail sentence would be followed by an additional one to 1.5 years of supervision

The George Road wildfire near Lytton, B.C., has grown to 250 hectares. (BC Wildfire Service)
B.C. drone sighting halts helicopters fighting 250 hectares of wildfire

‘If a drone collides with firefighting aircraft the consequences could be deadly,’ says BC Wildfire Service

A dose of the Pfizer-BioNTech COVID-19 vaccine is pictured at a vaccination site in Vancouver Thursday, March 11, 2021. THE CANADIAN PRESS/Jonathan Hayward
NACI advice to mix vaccines gets varied reaction from AstraZeneca double-dosers

NACI recommends an mRNA vaccine for all Canadians receiving a second dose of a COVID-19 vaccine

A aerial view shows the debris going into Quesnel Lake caused by a tailings pond breach near the town of Likely, B.C., Tuesday, Aug. 5, 2014. THE CANADIAN PRESS/Jonathan Hayward
Updated tailings code after Mount Polley an improvement: B.C. mines auditor

British Columbia’s chief auditor of mines has found changes to the province’s requirements for tailings storage facilities

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A North Vancouver man was arrested Friday and three police officers were injured after a 10-person broke out at English Bay on June 19, 2021. (Youtube/Screen grab)
Man arrested, 3 police injured during 10-person brawl at Vancouver beach

The arrest was captured on video by bystanders, many of whom heckled the officers as they struggled with the handcuffed man

Surrey Fire Service battled a dock fire along the Fraser River late Friday night (June 18). It was on Musqueam Drive, near Industrial Road, around 10:45 p.m. (Photo: Shane MacKichan)
VIDEO: Fire engulfs pier on Surrey side of the Fraser River

Dock has reportedly been unused for a long time

Most Read