Posted by Peter Roaf on Feb 05, 2019
Almost 20 years ago, discussions began about consolidating the many different, unconnected federal employee payroll systems scattered throughout the many government departments. The aim over the long term, of what has become known as the Phoenix payroll system, was to consolidate all the payroll systems in the various government departments into one overall system in one location. The system has proven to be a major failure.
Having served a three-year term on the Canada Revenue Agency (CRA) Board of Management, independent lawyer Mark Dwor, a practicing member of the Law Society of British Columbia, in intellectual property and international transactions, spoke to Ladner Rotary about the federal government's failed Phoenix payroll system, He is a member and leader of many professional, arts, and other community organizations, with a strong emphasis on charity and not-for-profit governance.
These are notes from Mr. Dwor’s presentation and other sources. Any errors or omissions are those of the reporter.
  • Phoenix, now run by Public Services and Procurement Canada, was originally planned in 2009 by Public Works to replace the federal government's 40-year old pay system.
  • The aim 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, on a promise to save the government $70 million a year.
  • In 2010 the location selected for the new, centralized payroll centre was Miramichi, New Brunswick.
  • In February 2016, the Phoenix pay system was launched to over 34 government departments, and, in April 2016, to the remaining 67 departments as the old system was finally decommissioned.
  • The move to the new location included bringing in higher level, more experienced payroll staff and laying off more junior staff, who had many years of experience in the earlier systems and knowledge of all the idiosyncrasies of those systems.
  • Despite many years of development under various governments led by both Liberal and Conservative parties, the Phoenix payroll system could not deliver on the vision and intended purpose of the consolidated payroll system.
  • After the roll out, there were continued complaints from federal employees about underpayments, over-payments, and even non-payments.
  • Given the endless number of problems with the pay system, not only have those savings have not been realized the combined cost of implementing and fixing the ailing program has so far cost well over $1 billion.
  • In large contracts for new systems the service standard is usually set at 95% effectiveness, but in November and December 2018, with overpayment, under payment or not payment of employees the Phoenix system was operating at a +/- 50% standard.
  • Now the federal government is working on an entirely new payroll system. Payroll employees in the earlier system who were dismissed or chose not to move mainly from the Ottawa area to Miramichi, New Brunswick, are being wooed back to run the payroll system, with only limited success.
  • For the federal payroll system which was projected to cost $310 million to set up and save our government $70 million a year the anticipated cost of fixing the program has climbed to $2.2 billion over five years.
Mark Dwor is thanked by President Kerry-Lynne Findlay and Denis Denischuk
photo by Mel Baly